The Euro's 4.4% decline since August 6th has the currency trading down near oversold levels. Currently at 1.2690, the bottom of the trading range is 1.2645. In the past the 50-day average has been a good indicator of trend. On 12/10/09 the Euro broke down to oversold levels; the initial decline was followed by a change in trend which lasted through the first half of the year. The overbought condition on 7/5/10 was followed by continuation of the rally.
Currently the 50-day average is in an uptrend and traditional overbought and oversold analysis says that oversold in an uptrend equals a buying opportunity. As shown below, on 12/10/09 that analysis could not have been more wrong. Wait to see if the trend changes before making any decision on the Euro's direction.
I believe that charts are the foot prints of money, however, i don't think that we can say for sure that the EURO is oversold. This might just be a retracement. EUROPE is in a lot of trouble right now with many countries not able to service their debts. We have to wait and see. i think traders have to trade light and not take huge positions in the market right now
Posted by: Stock Market For Beginners | September 19, 2010 at 03:00 AM