ETF CORNER

FXE : When will the Euro stop rising ?

The rising Euro/Usd is a concern ! When the Euro rises,Oil rises and Gold rises. The US consumer must pay higher energy prices and his purchasing power abroad melts like ice cream under the sun in the Saharan desert !! I made a post yesterday about a possibility of another higher leg in USO. A break of the Euro above $1.49 could trigger another rally in Oil prices and USO could reach $45 ,while the Euro could rally up to $1.53 (green scenario) ! On the other hand if the Euro fails to break above $1.49 this week,then the rally in USO will be in jeopardy, as well as the rally in stocks (blue scenario) !  The Euro holds the key here !!

Related ETF's

EUO : Double Short Euro ; ULE : Double long Euro ; FXE : Long Euro

FXE : Technical update !

This an update of the previous post (Click here) ! The upside in the EUR/USD has been contained ! You can use EUO (Double short Euro) or ULE (double long Euro) if you don't feel satisfied with the volatility in FXE ! My intermediate scenario for FXE remains is the following :

FXE : Currencyshares EUR/USD.

 

FXE : Euro upside will remain contained !

I am warming up to the idea that the US Dollar is beginning a bottoming process ! I posted two days ago that USO (Oil ETF) was in the early stages of a topping process : (Click here) . Oil and the US Dollar are inversely related until now!

Concerning FXE (Euro ETF) ,I believe that it is starting to top out ! FXE has little upside potential from here.The Euro will top in the same manner as USO (Oil prices) will ! The process could take a little while (few weeks to a couple of months)!

Looking at the chart of FXE (Euro) you can notice how the upside potential is getting narrower by the day! The Euro is still stuck in this huge triangle (consolidation pattern) that I have anticipated on december 19th 2008 (Click here) ! I still believe that this triangle will ultimately resolve to the downside,which also would be bearish longer term for equities and oil prices for end of 2009 and 2010 !

If you want to trade the Euro with double long and short ETF's here are the possibilities :

EUO (Double short FXE) ; ULE (Double long FXE)

I think that now is the time to accumulate some EUO !

EUR/USD breaking down : Focus on UUP&EUO.

The Euro has violated the support line. I would focus on EUO(Double long Euro) and UUP (long US dollar) for continued strength in the US dollar.

I am a long term bull on the US dollar see my long term picture in link below :

http://etfstocks.typepad.com/markets/2008/12/dollar-index-supercycle.html

I am focusing on the "scenario 2" mentionned in this previous post (see link below):

http://etfstocks.typepad.com/markets/2009/02/eurusd-how-to-trade-euoule.html