The Euro paused briefing yesterday only to reach another record high against the dollar today. The EU commission commented on the strength of the Euro was attributed to the strong Euro zone economy and problems related to the U.S. sub prime sector. Despite the strong Euro, the majority of the EU countries have been thriving. The exception has been France which has been lobbying for intervention by the central back to their economy has been hurt by the expensive Euro.

The selling point is at 1.3795 or 1.3800; triggered by the breaking of primary trend line and failure to reach higher than the previous peak of 1.3830; the market swings and change the direction of the trend.

- Fibonacci retracement 23.6% represents the take profit at 1.3760
- Previous resistance is the stop loss at 1.3836

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of the two moving averages above the zero line. The shorter term moving average is faster than the long term and is pointing downwards with a break of zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that is in a downtrend.

The zero line of the ROC (Rate of Change) is very important to understand the strength of the market and as we see on the graph; it breaks the zero line and moves downwards. We should always look at the trend line; and in this example it breaks the primary trend. For the momentum oscillator we have to concentrate at the zero line and the trend of the oscillator that already breaks.

Most of the indicators show us the weakness of the Euro against the US dollar and the reversal of an up trend that has happened the last week.

By Finotec’s professional analyst,
Tony B

dealingdesk@finotec.com