Wednesday, March 24, 2010

The Euro Opportunity ...

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I've been watching FXE sink over the last month, only to watch it reverse over the past couple of weeks and attempt a breakout relative to the recent past.  Well, it's resumed the downward slide, and with sinking EMAs, I think we should look at the contra ETF EUO.

EUO has been showing strength all week and it is very close at clearing $21.00 again, which it touched on 2/25.  Important here is that when we look at the slope of the 65d EMA, and we smooth that value with an 8d, 13d, and 21d EMA, the 8d has just crossed the 13d from below, a bullish sign.  Furthermore, the 2d EMA of the slope of the 65d EMA has closed above those EMAs, effectively "pulling them up".  This too is considered bullish.  Finally, with today's action, the 8d will cross the 21d from below on Thursday if the EUO continues upward.

I'm looking to enter a 50% position on Thursday if EUO continues upward on strength, the 50% being comprised of 25% from the first 8x13 from below, and another 25% as the 8x21 from below.  The final 50% will be when the 13dx21 from below.

Thoughts are appreciated.

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Remember, you are responsible for your own trading decisions, not me.  Please do your homework.

Regards,

pgd