Euro Channel Resistance

We are still focused on channel resistance that dates to the May 2006 high. The rally stalled at this level last week and the spinning top candle on Wednesday also warns of at least a correction. The monthly chart (using USD/DEM prices before 1999) shows a potential triple top with the July 1995 (1.3822) and December 2004 (1.3670) highs.

Daily RSI remains divergent with recent peaks and has declined from above 70. The technical evidence for a reversal is stronger when one considers the complete one sided sentiment (speculative positioning is at a new record for euro longs for the third week in a row now).