With most of the majorFX advisory services recommending FXE as a current short, there’s a lot of disappointment in the air. Compass FX mentioned today that several major banks, including Citicorp had initiated shorts at 1.3250, which 2 days ago seemed like a no-brainer major resistance level.
FXE, however, obviously didn’t get that news and driven by massive European accumulation and short covering, rose another % today and after hours is once again above the US equities market close price. Yesterday I posited 136 as a realistic short term resistance level for FXE and current momentum shows little divergence from that target. The massive volume surge evident in yesterday’s sort was pumped even higher today. As for the poor dollar, that 22.00 target mentioned yesterday is alsoon track. I would normally expect a closer alignment of the SPX and the FXE per my previously posted pairs studies, but we are clearly witnessed a significant divergence of momentum. Tomorrow we’ll take a closer look at this situation in search of tactical trading clues. For now FXE is the 800 pound gorilla as gold and TLT (on almost double volume) continue to surge, reflecting underlying nervousness with equities in general.
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