Euro Update

Since most risk assets move the opposite of the $USD and the Euro moves the opposite of the $USD (as well as the problems in Europe), being the Euro makes up 50% of the US Dollar Index, the Euro is the easiest way to see divergences in the market as the market and Euro should move together although relative performance can be wildly different. In any case it is much easier to show and see divergences with the Euro rather than the $USD as you have to transpose them to an inverse relationship. Also Euro analysis helps us with the biggest fundamental issue out there, the EU.

Even though at this point the SPY is down -0.17%, the Euro (FXE) was up +0.31% today which gave the market some support, had the Euro been down, the market would have been uglier. I think the Euro is about to see a move down, don't forget GS's long Euro call Aug. 2nd.


Here's the Euro update...

 Here's the SPY in green and Euro in red so you can see the correlation, recently the Euro has dropped off, not good for the market, but today only it was a bit stronger on Greek news and basically no other tier 1 data.

 Euro (FXE) 5 min shows a positive divergence sending the Euro higher and distribution in to that round the 7th and another positive divergncee on the 9th/10th and distribution of that as it sent the Euro higher today.

 A closer look at the 5 min chart, I tried to highlight price where accumulation and distribution occurred.

 I did the same with this 15 min chart which is more important, the Euro is leading negative on this chart when comparing where price and 3C are vs. a relative point in the past.

The 30 min chart reduces noise and reveals trends, we see accumulation of the Euro near lows and distribution in to the highs, the distribution is quite strong as we have a leading negative divergence at a new low for this chart while price is not at a new low.