Euro- Time for the crash to turn into a rally?

euroclustersupport1yearroclowestevermarch25CLICK ON CHART TO ENLARGE

The past year has been rough on the Euro/USD! How rough? The bottom section of the above charts looks at the 52-Week rate of change on the Euro, which reflects the Euro/USD has had the worst one year decline in its history.

The decline has driven the EUR/USD to a potential cluster of support (top red rectangle).

The historical decline in the EUR/USD has had a big impact on sentiment. The chart below from Sentiment Trader, reflects that just 19% of investors are bullish the Euro at this time.

eurobullssentimentmarch25CLICK ON CHART TO ENLARGE

Does it seem crazy to think that the Euro could actually bounce? I can understand if you feel that way, as the trend for sure is lower at this time.

I like this theme…its not the odds of something happening that is key, its the impact if it does. The odds might be low that the Euro rallies, if it does, the impact could be rather big since such extremes are in play.

Should the Euro rally, odds are decent that the metals complex (Gold, Silver and Miners) could be a beneficiary. Stay tuned friends, this could get interesting. Should the Euro rally, it would surprise a good number of investors, as 89% of investors are bullish the US$ at this time (record levels)!

 

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Nikkei- Next long-term resistance 18% above current prices

nikkeimonthly38fiblevelbreakoutmarch23CLICK ON CHART TO ENLARGE

The S&P 500 is near all-time highs. The Nikkei 225 can not say the same thing, as its remains nearly 50% below its monthly closing high back in 1989. This year, the Nikkei is doing much better than the S&P 500, up 10% more and it is attempting a breakout of a key long-term Fibonacci retracement level.

The above chart looks at the Nikkei on a monthly closing basis since 1982. I applied Fibonacci to the 1989 highs and the 2009 lows and the 38% Fibonacci resistance level comes into play around the 19,464 level. The month is not over with at this time, should it close the month above this level, it would accomplish something for the first time ever.

Should the Nikkei close above the 38% Fibonacci level, the next Fib extension level comes into play around the 23,000 level, which is nearly 18% above current prices. The Nikkei isn’t the only key asset in Japan that is testing an important level.

dollaryenresistancebearishwickmarch23CLICK ON CHART TO ENLARGE

The U.S. Dollar has been very strong compared to the Yen over the past few years. The strong rally now has it facing falling resistance that has been in play since the last 1990’s, with momentum hitting the highest monthly momentum levels ever.

The month has another week before its over and the US$/Yen could be creating a bearish wick at this resistance level.

These charts reflect that the Nikkei and US$/Yen are both facing key long-term levels at this time. What the Nikkei and US$/Yen do at these levels could well have a big impact going forward. Keep a close eye on these markets next week, to see if key monthly closing levels are accomplished.

 

 

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Markets historically healthy when these take place

ratiospushingaboveresistancemarch20CLICK ON CHART TO ENLARGE

Value/Growth ratio… spent about a year and of late has broken out.

Discretionary/Staples ratio…pushing above a pennant patter, with support in place that started back in 2010

Russell/S&P ratio… hit support in October of 2014 and continues to move higher, reflecting an out performance on the part of small caps.

ad4packmar19CLICK ON CHART TO ENLARGE

Historically when these ratios and the A/D lines are heading higher, markets are reflecting positive/bullish price action.

 

 

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