This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Currency ETF Review: Euro

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( The FRED Report) -- Here at The FRED Report we recently completed a review of the currency ETFs and we noticed some interesting technical patterns we will discuss here (for general markets update video -- click here). These patterns are particularly interesting in the European currencies, because they are actually contrary to what the news would lead investors to expect. But remember - the markets are a "discounting mechanism" -- and it may very well be that European problems may already be factored into the current environment! We show charts below.

First, we look at the weekly chart of the FXE (Euro Trust). Notice the layers of support between 125 and 127 - these have held. Second, look at the stochastic and notice that it is just perking about the 20 area. This is suggesting the possibility of a near-term rally in the euro, and given the risk of Greek default and the key date of March 20 -- an upmove now would certainly be a surprise.

Second we look at the FXF (Swiss Franc), perhaps the only currency left in the world that is backed by gold. The weekly chart here shows a bottoming pattern as well. Notice how there was government intervention to lower the value of the currency in August of 2011 (the big spike on the chart). The Swiss has been stronger than the euro but normally trades in line -- that relationship did break down during 2011. But, if the euro rallies, the Swiss should outperform.

Last, take a look at the FXB (British Pound) - another alternative to the euro (FXE). It should also outperform on a rally in the euro, and is a bit more liquid than the Swiss.

At The FRED Report, we have been bullish on the dollar for much of the past year, and that has worked well for us. It is likely that we will see a change in the currency trading patterns over the next six months. Interested readers may email me for a copy of this report . While the dollar may still have a strong 2012, it looks ready to start an intermediate decline. What bigger surprise for the markets than for this to occur as the Greek crisis matures? While this trading idea is risky, it seems worth a try if adequate risk management is used.

Fred Meissner is founder and publisher of The Fred Report. Fred is a CMT and past President of the Market Technicians Association (MTA). He recently left Merrill Lynch's Market Analysis Department and Sector Strategy Department to form The Fred Report.�A detailed bio is here: Fred Meissner.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
UUP $25.59 0.39%
FXE $106.94 -0.51%
FXF $99.44 -0.63%
FXB $152.74 -0.01%
AAPL $115.47 -2.50%

Markets

Chart of I:DJI
DOW 17,564.59 -33.61 -0.19%
S&P 500 2,090.86 -7.18 -0.34%
NASDAQ 5,100.9990 -14.3830 -0.28%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs