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.
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Euro Trading Range - Nearing Oversold Level
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