Friday, October 16, 2009

EUR/USD Position Worth Watching

A look at the daily EUR/USD chart shows a possible top starting to form. Notice on the daily chart above that the RSI is at a level that has previously market major tops (see blue arrows on chart) which is combined with an RSI divergence forming if today's decline holds. Now this behavior can remain for a while as prices work higher, but it's a sign of the end of a trend, not the beginning.

I'm watching the euro closely because as I've said before, when the EUR/USD tops so will the stock market.


Michael Eckert,aka-Columbia1 said...

Nice catch on the deverging RSI!!

Anonymous said...

I enjoy your website! Thanks for sharing your hard work. Are you in line with Prechter's thinking on the dollar? Or are you thinking of a dollar reversal over a shorter time period before resuming the downward trend?

Todd S said...

Thanks for the comments. SRS, yes I am in line with Prechter in thinking the dollar is forming a major bottom and will go on an insane rally that will coincide with a stock market collapse. So I'm looking for the EUR/USD to top to signal that the US dollar has bottomed and the stock market has topped.