You may find it a little unusual that someone living in Buffalo, S.D., would be paying much attention to what happens in the foreign exchange markets. But markets are more global than ever today, and I watch the currencies closely for what might happen to the U.S. dollar, which is close to my heart if not a little scarce in my billfold at times.
For example, March euro currency futures prices are trapped below a two-month-old downtrend on the daily bar chart. The euro bears still have the overall near-term technical advantage and are looking for more on the downside in the near term.
Weak economic conditions in the European Union are a main downside fundamental force on the European currency. There are no early technical clues to suggest a market bottom in the euro any time soon. To me, that suggests the dollar could remain strong or get stronger, which has implications for markets I trade.
If I am looking at a traditional bar chart, it looks to me like the euro bulls’ next upside price objective is pushing and closing prices above solid technical resistance at the February high of 1.3087. The next downside price objective for the bears is closing prices below solid chart support at the contract low of 1.2351.
An important intermarket analysis perspective provided by VantagePoint Intermarket Analysis software (www.TraderTech.com) also suggests there will be more downside price action in March euro currency futures in the near term.
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The VantagePoint daily bar chart for the March euro currency futures shows the predicted 4-day exponential moving average of typical prices two days ahead (blue line) is below the actual 10-day simple moving average close, which is a near-term bearish signal that has been pretty consistent for all of 2009.
I also like to monitor VantagePoint’s Predicted Neural Index at the bottom of the daily chart for March euro currency futures. It is presently at 0.00, also suggesting downside price pressure in the near term.
When the predicted simple three-day moving average value of typical prices is greater than today’s actual three-day moving average value, the Predicted Neural Index is “1.00,” indicating that the market is expected to move higher over the next two days. When the predicted simple three-day moving average value of typical prices is less than today’s actual three-day moving average value, the Predicted Neural Index is “0.00,” indicating the market is expected to move lower over the next two days.
The predicted neural index is a proprietary indicator that uses moving averages in another way to predict whether typical price will be higher or lower two days in the future than it is today. That’s not a lot of time but is enough to give me an early edge over other traders, even in my remote location.
