EUR/USD FX

You may recall my analysis this week suggesting the dollar was about to find support and my belief that the Euro may have just undergone a false upside breakout.

Here's a look at today's FX action in the pair.

 This shows the entire trading week on a 10-min scale.

Here's the last 2 days on a 5 minute scale, look at the parabolic descent of the Euro.

Lets look at UUP (proxy for the dollar)

 The daily chart is very bullish, a bullish descending wedge followed by what I think is base forming activity. I suggested we'd see support at the red trendline, that happened yesterday and today we are bouncing off that support. Why did I think there would be support there?

As I have mentioned, one of the things that happens in the market is information is way ahead of us, thus planning by institutional money is way ahead of us, but a regular price chart doesn't show that. 3C did, note the very positive divergence, especially in relation to the duration of the two negative divergences.

As for FXE-the Euro Trust ETF...

 a bearish daily chart with what I thought to be a false breakout in white. Remember the market is like a pendulum, it swings too far one way and then too far the other. Also remember false breakouts turn suddenly and in this case, tend to fall fast an far.

Here's the counterpart to the USD, a negative divergence in the FXE on the breakout.

This may be a worthwhile trade as it is likely that we will see the Euro retest lower support so long as today's trend holds. With trouble brewing in Eastern Europe-almost a early stage of Egypt and Portuguese and Spanish bonds back to commanding all new high yields, cotagion is back in rotation in the fear cycle.