some new technical developments in euro currency and dollar index past few days.
Firstly, as mentioned in previous daily euro summary, considering recent overbought conditions and 1000+ pip run up in the euro over the past month, will be looking for small technical breakdowns to start buidling bearish case. Earlier today one of the steep uptrend lines (dotted) was broken resulting in some sell off into the close:
Euro is currently at support of what looks like possible bull flag with lofty target of another 600 pips of upside shall it play out. Next high probability long entry seems to be retracement of 2-3 week action and previous resistance level, which also happens to line up with the trendline shall EC trade down to that level within next 2 days.
Another key development on the daily chart is that 50 ema crossed above 200dma at the start of the new futures session, for the first time since April 2006:
Last time it resulted in a huge multi-year bull run for the euro all the way through 2008.
How dollar index will play out will be key in determining further euro direction:
Dollar index has found some support at psychological 80 level which also happens to be 50% retracement from a decade low. 50Ema is withing 0.36 of corssing under 200dma with short ambush lining up in that area very similarly to the euro chart.
The way these set ups play out will be key in determining next longer term trends in euro and the dollar.