Today’s Euro rally against the US Dollar has been very impressive. However, technical positioning suggests the bullish momentum may be nearly exhausted. Prices are now pushing up against formidable resistance at the intersection of two falling trend lines, one originating from the all-time top at above 1.60 and the other from the 08/11/08 high at 1.5088. The hurdle is compounded by the proximity of the 50% Fibonacci retracement of the 12/18/08-03/04/09 downswing at 1.3588. In broader terms, price action from mid-July looks to be setting up a descending triangle, a bearish continuation pattern. We will monitor price action in the next 1-2 days looking for signs of topping in the daily candlesticks to signal an entry short targeting another test of the double bottom at 1.2454.
