TECHNICAL ANALYSIS
FX
Euro is in the final movements of a price move that is very clearly a countertrend affair
be sure, the 2017 decline has been a purposeful move that has put more than just a dent into the U.S. Dollar’s early- year effort to resume its long- term uptrend. But this decline isn’t what it might appear to be. After completing a strong
trendy move in early 2015,
the Buck has been in a massive sideways (i.e. countertrend) move. In fact, this chart provides a textbook example of the difference between trendy and countertrend price movement.
GBP current recovery can end at any time
If you were to draw a horizontal line across the advance that played out from mid-2014 into early-2015, the line would only touch price once. This is how trends look. Contrast that by drawing a horizontal line across the price action that has played out since early-2015, and you find that price can’t get enough of that line – price touches the line over and over again. This is the stuff of countertrend moves. So if the trend was up into the 2015 high and we’ve since been in a countertrend move, it can only mean one thing – the trend is still up. The 2017 decline is the more purposeful ending move that I detailed above, and it looks to be on its final breath. Once this countertrend move ends – and it’s expected to end at or above 23.00 on our U.S. Dollar ETF (UUP) – the long- term uptrend will resume. A low is likely in the next few months, so be ready for it and take any notable strength that occurs from here seriously.
Euro (ETF: FXE)
A very similar approach can be taken when analyzing the Euro. The Euro has been in a decline since 2008. At some point, this downtrend will end and a new uptrend will emerge. But there is no reason to think that the
FX TRADER MAGAZINE October - December 2017 19
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