Euro Engulfs The Prior 13 Trading Days!

JC Parets
December 7, 2016

One of the more interesting scenarios across the global market place is what is happening in the US Dollar, and the Euro component more specifically. Remember, the Euro represents a majority in the entire US Dollar Index. On Monday, the Euro engulfed the prior 13 trading sessions. This means that it made a new low, below the past few weeks trading, and then reversed to close at a new high, above any of the highs over the past few weeks.

EURUSD

This bullish engulfing day is something I take seriously, especially within the context of the current sentiment towards this market.

Last week I presented my bearish case for the U.S. Dollar (see here). It includes the most recent magazine cover for The Economist showing George Washington on the US Dollar but with a body builder's body. Clever, but telling of the current bullish sentiment towards US Dollar.

usd3

Now this week we come to see this monster Bullish Engulfing day in $EURUSD?

Look how the US Dollar Index just made a new high, but the Euro did not make a new low. I think that divergence is telling and suggests a mean reversion in Euro. We want to be short US Dollars if we’re below 100.

EURUSD

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This post originally appeared on Investopedia.com on 12/6/16

 

 

Tags: $DX_F $UUP $DXY $EURUSD $6E_F $FXE

 

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