The Euro has been oversold for many weeks now. And that goes to show you how oversold can become more oversold for traders trying to pick bottoms. But there’s reason to believe that a rally may getting started here.
Looking at the popular forex pair involving the Euro, the EURUSD (or how many Dollars buy one Euro), we can see that the Euro is stabilizing after testing support at the bottom of a bear channel that began forming in October 2008. I don’t see any flashing lights screaming that technical support at this floor should hold or fail. Anyone out there with reliable figures about short interest in the euro futures contract are welcome to join this conversation. Moreover, I’d be curious to know how crowded the short euro trade is.
Either way, the bottom line here is that the market has come to a line in the sand that a lot of traders are probably watching. And if you are still short the Euro, you should feel a little tension in the back of your neck about it. The bottom of the channel seems like a logical area for some sort of Euro rally to begin.
EURUSD Monthly Chart – Is The Euro Stabilizing?
Good trading, everyone! Have a nice weekend.
Follow Chris on Twitter: @ChrisBurbaCMT
No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
