26/11/2011

Where are the stock markets going now. Part 1 The EURO

The biggest question for all markets now is. How will the Euro perform ? It is a must to know now exactly how the Euro  moves. The Euro against the dollar is the biggest trading item in the world on turnover. Far bigger than all stock markets in the world taken together. No one can manipulate its trend more than for a very short time. Here is the trend 1971 until today. There are 5 waves and the euros long uptrend might soon be over. The low in March 1971 was 0.5387 and the peak in July 2008 was 1.6037.

Here is the last long wave wave  from 2000 until today. After the peak 3 years ago at 1.6037 there has been a three wave correction down to 1.1875 in June 2010. From there a five wave move up to 1.4939 in May 2011 which is the last peak in this chart. Since May we have had FIVE waves on downside if the Euro closes the month next Wednesday below 1.3384. I will come back to this if it happens.

This is the weekly chart. One bar is one week. Friday close was 1.3237, see the horizontal line. A break below 1.3142, the nearest low to the left, is very bearish. The technical picture of the weekly chart says that it will do this but not when. It could happen on Asia opening Monday or a two weeks later.




Finally the daily chart, every bar is a day. Here you can see exactly what it takes to make a new low. The trend can stop here and go sideways for four days and then move on upside or it can stay a couple of days and then drop to a new low. Everything is possible. The coming week will be crucial day by day.


Since the main fundamental question is the Euro crisis I believe myself that where the Euro goes the stock markets will go.

PART 2, The Stock indices.

The indexes looks more or less like the Euro daily chart above. The Spanish IBEX looks the worst with the 8 week MA down before crossing the 21 week falling MA.


This is what it looks like. More or less as the Euro week chart but here the MA is turning down just before it hits the 21 MA. This use to be a very bearish sign. There is no chance what so ever to get above this falling 8 MA for the next 8 weeks if the down fall should stop here. It also use to be a very power full "push further down" sign.

The Italian MIB and the French CAC will get their 8 MA down when the new week have started and they have a bit more to fall than IBEX. DAX, FTSE, SWED and the EURO can theoretically still avoid this situation another week or two. DOW and SP500 still have their  MA's on upside but they could turn sideways soon or down if a big drop happens.

Next Wednesday the falling 8 month MA:s will cross the 21 month MA and become definite bear markets for DAX and FTSE.  DOW, SP500 and the EURO will still only be bear markets, which theoretically can be reversed, but have their falling 8 MA:s down steeper after this last day of November.











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