Tuesday, August 14, 2007

The Euro Versus the US Dollar

When it comes to charting, very few things are known with certainty. But I do know one thing for certain, and that is either the US Dollar or the Euro will have to break support soon. It's mathematically impossible for this not to happen. You'll see what I mean when you look at these charts:

The chart above is a weekly chart of the Euro. The Euro has been quite weak lately, but at least it is close to the upward sloping trend line. For me to remain bullish on Gold Stocks, the Euro must find support along this line.

But back to my point, if the Euro continues to grind higher, it will have to push the US Dollar lower, and the US Dollar is right at support near 80:

Basically, what I'm trying to say is that if the Euro holds support, then it will cause the US Dollar to break support. Conversely, if the US Dollar continues to bounce off 80, it will cause the Euro to break its support line. Either way, something has to give.

Because the Euro is in a major uptrend, and the US Dollar is in a major downtrend, I would bet that the US Dollar will be the one breaking support. Thanks for visiting my blog.

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