EUR/USD view for week OCT/08/2007

I. Important news from the week:

1. Gold stands high.

2. USD bounce a bit.

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II. As I wrote before:

FED blew it!!! They totally destroyed the dollar in long term. I think they will inflate now, and stock market will go higher and higher, but only in nominal terms.

GOT GOLD :-)

As you can see, back in 1992, USD was down once 78.43, well, we had similar reading, I can not say how the recent low was, but was close to 78.43.

Well congratulations. Last week, we were in uncharted waters, then we had a bounce so we are now back in "normal" levels. We will see for how long...

For first-time readers, and those who do not know, the wedges are reversal patterns. This wedge is bullish for USD index, no matter what people say for US economy, debt bubble etc. I am sure that at the end of the year, the USD will be lower, but wedge suggest we will have one bounce before that.

Unfortunately, last week we had proof that our beloved wedge, is wedge no more.
It was transformed in parallel bearish channel.
Now, even if we see USD up, it will be not an uptrend, but just a correction.

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III. The "wedge":

The wedge? What wedge? Did you see a wedge? I don't see a wedge? :-)

There is no wedge. Not anymore. What we have is downtrend from 2006 year.

USD index weekly chart:
The wedge is transformed into a parallel channel. Then the price bounced back. I believe the price will go up to the pink line, which is old wedge support. A test will occur, and if the resistance hold (I think it will), we will have future drop. In case, the resistance not hold, we will have a rally to upper wedge line - around 81. Brown line is added, but I think is not so significant (you will see why in next charts)

EUR index weekly chart:
Don't panic :-) Here I did an un-ortodoxal thing, I flip the chart. Here we see same lines, with same colors. Brown line "pointing" totally different "place". Pink line looks much more significant, also the price is on the line.

USD index / EUR index ratio weekly chart:
Similar to others, here you are USD index / EUR index ratio. Brown line again is "pointing" "wrong".

EUR/USD 4 days chart:
Here the price is exact on the pink line. We may expect EUR to go up.

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IV. Summary:

EUR will rise now, USD to fall.
We may have some future bounce to 1.40, but no more.

Happy week and trade!!!

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V. Carry trade with AUD/JPY:

Will not be updated this time, probably tomorrow.