Last week I provided the case from the long and short sides of the EUR/USD trade and it appears that perhaps the bullish sentiment behind the Euro that we saw last week was somewhat premature. The Euro appears to have run out of momentum for the moment as the dollar hangs on to the 79 level.
The Euro/usd index met resistance at 99.65 and managed to remain flat on the day. The index has had trouble staying above this resistance level in the past and though it was all bullish last week, the momentum in the trade looks to be waning. In addition to the failed test of resistance, today as with the last 3 days, the index has opened higher than the previous close of each previous day – also known as trading gaps. In many cases, trading gaps can lead to a topping pattern. Given the information above, it appears that a top could be exactly how this coud be lining up.
FXE closed lower than the upper, downward moving trendline despite opening higher this morning. It also tested a previous pivot point as resistance but reversed intraday to finish marginally higher. This again shows that momentum has weakened and the bullishness from last week may also have just been some institutional pumping. The 14 day Stochastic is entering a state of overbought and to have that indicator line up with failed resistance tests after 4 days of trading gaps means that it should have to regroup before making attempting another run on the highs.
Right in line with the previous charts, the dollar index closed above support after the bears made a run at breaking both flat support and the lower trendline intraday.
Bottom line in this trade is that the momentum appears to have shifted back towards the dollar for the moment, however it is still up for grabs and either side can win at this point.
Moving on to one of my favorite REE producers, Great Western Minerals (OTCPK:GWMGF) had a very pleasing bullish reversal during the course of the trading day after being taken down hard for two consecutive days.
Support is at $.60 and I wouldn’t be surprised to see shorts attempt to test that level within the next day or two however I do believe that it won’t close below that or the 20 day MA. Regardless of whether or not selling pressure forces a test of the lows, I believe that the stock is done with it’s brief consolidation and will likely test $.70. Assuming nothing changes in the REE market, GWMGF can easily take out that high and continue upward.