As usual, the flip-side of the euro is the US dollar index as the greenback still looks to have established a major (long-term) top. Monthly stochastics established a bearish crossover above the overbought level of 80% at the end of November, with the USDX now waiting on confirmation of a new major downtrend. The USDX came close to confirming a new secondary (intermediate-term) downtrend late last week as it tested its previous 4-week low of 95.52 with Friday’s low of 95.57. Heading into this week’s trade, last week’s low is the new 4-week low mark increasing the likelihood of a new secondary downtrend being confirmed.
Theoretical Position: If still waiting to see the US dollar index, have orders ready just below the previous 4-week low of 95.57. Once these orders are filled, but stops could be placed above the November high of 96.94.
