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Euro Trading Range - Nearing Oversold Level

|Includes:Market Vectors Double Short Euro ETN (DRR), EEN, EUO, FXE, ULE

 The Euro's 4.4% decline since August 6th has the currency trading down near oversold levels.  Currently at 1.2690, the bottom of the trading range is 1.2645.  In the past the 50-day average has been a good indicator of trend.  On 12/10/09 the Euro broke down to oversold levels; the initial decline was followed by a change in trend which lasted through the first half of the year.  The overbought condition on 7/5/10 was followed by continuation of the rally.

Currently the 50-day average is in an uptrend and traditional overbought and oversold analysis says that oversold in an uptrend equals a buying opportunity.  As shown below, on 12/10/09 that analysis could not have been more wrong.  Wait to see if the trend changes before making any decision on the Euro's direction.

Euro trading range 

Disclosure: no positions