December Euro currency (E6Z26) futures present a selling opportunity on more price weakness, according to Jim Wyckoff of Barchart. The analyst identifies a specific technical trigger for the trade: a move below chart support at 1.1500. If that level breaks, Wyckoff projects a downside price objective of 1.1150 or below.
The recommendation follows a period of declining prices that recently reached a six-week low. Wyckoff points to the daily bar chart to show the trend is downward. He also cites the moving average convergence divergence (MACD) indicator, which he describes as being in a bearish posture. In this configuration, the blue MACD line sits below the red trigger line, and both lines are trending down, giving bears the near-term technical advantage.
Wyckoff attributes the fundamental pressure on the Euro currency to two main factors. First, he argues that the Federal Reserve's interest rate hike on Wednesday is bullish for the U.S. dollar ($DXY) and bearish for the Euro. He specifically cites Fed Chair Kevin Warsh's hawkish comments regarding the goal of keeping inflation under control as a driver for this divergence. Second, Wyckoff contends that the global energy crisis is hurting the Euro zone economy more than the U.S. economy, which further weakens the Euro currency.
For traders considering the position, Wyckoff advises placing a protective buy stop just above technical resistance at 1.1650. He notes that while he identifies potential opportunities, it is up to individual investors to decide when and if to initiate trades and to determine their size. All trades discussed in his analysis are hypothetical.
Wyckoff included a disclaimer stating he is not a futures broker and does not manage trading accounts other than his own personal account. He reiterated the Commodity Futures Trading Commission (CFTC) warning that trading commodity futures and options is volatile, complex, and risky. Investors are advised to consider their financial experience, goals, and resources before entering contracts and to review risk disclosure documents provided by their brokers.
On the date of publication, Wyckoff did not hold any direct or indirect positions in the securities mentioned in the article. The information provided is solely for informational purposes and was originally published on Barchart.com.