I pointed out before with my post "what's up with UUP?" that I detected a lot of bottom fishing in the dollar from the "not so smart money" to put in nicely. I continue to see that. One particular trader/investor who posted by the name of "Marvin newtradr" (does it get any greener than that?) said that he bought a LT position in the dollar via UUP. This same guy in the past has been, to put in it very nicely, not spectacular in his calls. He's not the only one bottom fishing....over the weeks I've seen numerous retail folks shorting the EURO.
Meanwhile take a look at the chart of the euro currency. What a lovely uptrend. There's no sign at all of exhaustion, panick buying or any kind of top. Instead, it looks pretty clear to me that this chart is signalling an upside breakout is immanent. Why anyone would try to top pick this chart is beyond me. At least you should look for some sort of a blowoff/panicky type upside move like in December to try and top pick or a clear confirmation of a top. Instead what you are seeing here is a creeping uptrend. The chart of the Euro looks very similar to that of the yeild on the 30 year bond just before it broke out in the spring.
Here's what the chart of the 30 year bond yield looked like just before it broke out
and now take a look at the current chart of the euro
Now, take a look at what happened to the 30 year bond yield
Will the same thing happen with the Euro? I think so and I think 1.50 will be hit before the end of the year. I'm sure you can come up with 100 arguements as to why the Euro should tank...I'm making this call based purely on what the market may be saying here in combination with the favorable sentiment backdrop of dumb money bottom bottom picking the dollar (top picking the euro).
I already have a put position on the dollar via UUP. I'm considering adding a long euro position via calls on FXE.
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