Euro Bubble About To Burst?

2009 will likely see a continuation of what started in mid-summer of 2008 which was a classic case of money flowing to the least riskiest assets and currencies.

I am not inclined to disagree with the headlines pointing out the dire economic conditions in place already and the likelyhood of these hard times lasting well into the future. I am inclined to think that for all it’s economic negatives, I’d rather whether the storm in the States than in Europe.

I’m not one to follow words, just price action, and the table below tells me all I need to know everyday. It’s how we keep track of those selected currency markets and how we determine which direction to trade them from. It is a traders tool so it is geared more toward the short-term, but it is also leading indicator. For all the talk of economic trouble in America the U.S. Dollar is currently pointed higher across the board. Now markets certainly are dynamic pricing vehicles and can change quickly, due to the shorter term time horizons of so many influential traders. What this table does show us right now is the wind is at the back of dollar bulls.

The Weekly Euro chart below also shows a technical occurence called support becoming resistance, which I, in my own short-term vision, and despite James Chen’s fine work, had overlooked. That Dec ’08 EURUSD rally may have been a last chance to exit le Euro, similiar to the rally in US stock indices last spring.

I’m not much for the intricasies of fundamental economics but I do know the basics, and I can see that Europe is not well posiitoned when it comes to natural resources, and she lacks experience with diversified populations, both of which can create difficulties during hard times,and both of which America gets much higher marks in.

Jay Norris

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Jay Norris
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About Jay Norris

Jay Norris is Director of Education at Trading University, has over 30 years of trading experience, and is the best selling author of "Mastering The Currency Market", McGraw-Hill, 2009, and "Mastering Trade Selection and Management", McGraw-Hill, 2011. He has also been published multiple times in Technical Analysis of Stocks & Commodities magazine.

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