$FXE Technical Outlook (Euro Index ETF), Euro/Gold Ratio Testing Lows, 50/200 Day Crosses and Technical Chess

The Euro has been trending lower since the US Dollar broke out on the sovereign debt crisis in Euroland (Greece).  Recap:

Two EUR/USD Outlooks by Mr. Top Step and John Rogue, Charts USDX [2/10]
UPDATES: EUR/USD, Trichet Leaves Early For ECB Meeting, Stiglitz Says No Default For US, UK [2/8]
Quick Look at EURUSD Hourly, Daily and Weekly Charts, 1.3912 (Chart Video) [2/1]

I shall chart out $FXE (the Euro Index ETF) and the $XEU/$GOLD ratio (Euro/Gold Continuous Contract) on this post.  I also provided actionable news links below from tonight.  First is the 6 month $FXE chart.  It is clearly in a downtrend channel which started in December 2009.  Right now the FXE relative strength index (RSI at the top) has been camping out below 30 for a while so IF it breaks above 30 there could be an oversold rally, in technical terms.  Remember FXE is a general look at the Euro so for a more detailed look research the underlying Euro pairs.

What's notable here is the 50 day moving average crossed BELOW the 200 day moving average.  The historical move in FXE has been trending lower and now it's confirmed (imo) by the 50 day historical trading period crossing below the 200 day period [less a massive fake out here].  Going forward the 50dma will act as resistance and the 200day will provide backup foot soldiers.  The shorter the period the weaker the resistance level.  There are many resistance levels ahead including the downtrend channel, ceiling resistance, 50dma, 200dma and the ultimate 151 level.  A technical chess board?!

FXE:NYSE (Currency Shares Euro Trust) Courtesy of Stockcharts.com

Now look at the long term chart.  RSI is testing weakness from 2008 right before the financial collapse.  Today looks similar but less intense.  Both put pressure on the carry trade so far.  You can see the downtrend from a 3 year perspective and it needs to break out of that downtrend.  If FXE doesn't hold here, 132.5 (from early 2007) and 130 are next levels of support.  If all else fails, FXE could double dip to 126-7.

Compare the 50/200dma crosses from 2008, 2009 to now.  The 50 day acted as support for at least one test each time.  I'm not sure when the 50dma crossed the 200dma before 2007 (commencing the $US burn/commodity bubble).  You can again see the resistance levels ahead and the ultimate ceilings to take out (151 and 160).  Next up look at the EURO/GOLD ratio.

3-Year, FXE:NYSE (Currency Shares Euro Trust) Courtesy of Stockcharts.com

Macrotwitter folks have been chatting about various gold ratios.  Here is the EURO-to-Gold (continuous contract) ratio.  FYI:  The continuous contract chart is a weighted average of gold futures via Stockcharts.com.  It is not Gold Spot XAU/USD etc.  CHECK IT OUT, EUR/$GOLD is testing a previous low in a descending triangle.  Inflection point is near around vertex!  WTF is going to happen to the Euro?

$XEU/$GOLD Ratio (Euro Index/Gold- Continuous Contract) Stockcharts.com


If the EU Ends Up Bailing Out Greece PIGS Will Eat at the Same Trough (WSJ)
Europe Finance Ministers Face Pressure for Detailed Greek Deal (Bloomberg)
Euro Declines on Concerns Over Greece’s Debt, Region’s Economy (Bloomberg)
Commitment Of Traders Report: Record Euro Shorts (Zero Hedge)
A Euro Event is Bullish for USTs (Short-Term) (Zero Hedge)
EUR/USD still under pressure, testing 1.3600 (FXStreet.com)
Greece Remains a Political Time Bomb (David Goldman/Seeking Alpha)
‘Euro Is Sound’ as EU Backs Greece, ECB’s Draghi Says (Update1) (BusinessWeek)
Euro Weighed by Growth, Interest Rate and Financial Stability Doubts (DailyFX 2/13)