Hypothesis of an Overbought EUR 020609

Fundamentals: USD had to be weaker, which it did, in order to recover its value e.g. promote exports for re-strengthening a weakened US economy. This can’t be allowed to go on too much because of the threat of inflation in the US hence the reason to prepare for an oversold USD or overbought EUR which expresses the same thing on the chart; a reversal. The US capitalist economic mechanism will rake in as much profits for as long as possible from a re-strengthening USD before it weakens again in the future to assist US economic recovery.



The hypothesis is that the EUR is overbought. What price move will prove this hypothesis to be wrong or correct?

• 1. A significant & continued excess of the previous high of <>1.4254ish means that the price is heading to a major resistance of <>1.4731ish. This will prove the hypothesis to be wrong.
  
• 2. A significant & continued excess of the previous low or channel support of <>1.3793ish means that the price is heading towards the major support of <>1.3539ish. This will prove the hypothesis to be correct.

By having the price in between the previous high and previous low means that the price is within a pullback zone. The current price is within the pullback zone, technically, well within a maintained long term current EUR bias.

Now, in order to profit from a EUR overbought, a test must be made and it will cost some money. In this test, the current price is a few hours past an optimal entry on the EUR/USD H4 chart. That is ok since the price had not moved much since then.



A stop loss is placed significantly above the Price Move 1 listed above at <>1.443ish. A first target is placed at the Price Move 2 at <>1.385ish. A second target is placed at <>1.3598ish.

In order for this test to proceed, there must be at least one similar opinion from a professional FOREX trading company, forming a minimum consensus of 2/3 directional bias. Taking into account two opinions of professional FOREX trading companies, the current consensus for this EUR/USD test is a good 2/3 USD bias.

Disclaimer: Trading in the FOREX market & other forms of investments involves risk. This information should not AT ALL be viewed as investment recommendations. The charts & information provided here are not meant for investment purposes & only serve as technical examples.