EUR/USD rate ripping to two-year highs leaves Euro at resistance. After reaching a high of $1.4 against the US dollar EUR/USD has been falling and dipping to all time lows in a matter of days. This is despite the fact that in most of its previous trading sessions EUR/USD has not been trading against the US dollar at all.
It is obvious that the recent fall of EUR/USD has caught the attention of the world financial market and especially the United States and has been followed by an attempt to protect Euro against a recovery. While the US Dollar index is not likely to rise, the European market is currently in a state of depression due to the EUR/USD rate ripping apart the Euro.
However, the European currency index does not reflect the situation in depth and does not give any indication of the direction of the decline, but rather only indicates the trend of the current state of the EUR/USD rate. But a chart which shows the trend of the Euro against the US Dollar index will help us understand the situation better.
A chart can also be considered as a chart of “Prices and Time” (or Price and Time) if the underlying data is displayed in “Roman Candles”. There are many ways to interpret these charts and it is best to be a little careful while using them. Here are some of the possible interpretations:
One way to interpret the “Prices and Time” charts is that they indicate when the USD index is going up. This means that the EUR/USD price is going up, and vice versa when the EUR/USD rate is going down.
The chart can also show the movement of the Euro against the United States Dollar index (US dollar index). When the EUR/USD rises or falls against the US dollar, the EUR/USD value is also likely to go up or down in accordance with the movement of the US dollar index.
So when the European exchange rate is falling against the US dollar it is likely to come down. But when the Euro is rising it becomes more difficult to buy EUR/USD because of the increasing price difference between the two. When the EUR/USD is falling or rising against the US dollar, the EUR/USD price is also likely to go up. So the question is whether the Euro can withstand such rapid fluctuations and remain stable or not.
So for the moment the answer is a big no. As far as the EUR/USD is concerned the EUR/USD rate should be able to cope with the fluctuations and will continue to go up and down in accordance with the movements of the Euro against the US dollar index.
But for other technical analysis purposes there is one way that we can use to determine if the Euro is going up or down against the US dollar index. This is the time of day index. This gives us the opportunity to see what time of day the EUR/USD rate is lower than the actual market price.
For the moment the answer to this question is yes. But there is another question that we have to answer also. The other question is whether we can expect a reversal of this trend as the euro is likely to move against the US dollar index as the price of the EUR/USD goes down.
To answer this we have to find out whether the EUR/USD is on a downward trend or upward trend. There is no such thing as a reverse trend in the market.
So at the moment it is safe to say that the European exchange rate is going down against the US dollar index, but we cannot expect a reversal as soon as the Euro rises or falls against the US dollar. But we will be looking forward to an upcoming time when this reversal will occur.