It Might be Time To Short The Euro – Forex

The EUR/USD has been very strong recently. The currency pair has been surging higher since November 13, 2012. In its most simple form, the EUR/USD will often trade higher along with the major stock indexes such as the SPDR S&P 500 Index (NYSEARCA:SPY). Whether it is the Euro or the major stock indexes, in essence, every trade is a trade against the U.S. Dollar Index at this time.

If you look at a chart of the EUR/USD, you will see a descending trend-line from the recent tops beginning on September 14, 2012. The Euro is now trading very close to that resistance point. Lower high pivots such as these are usually a very bearish indicator for any equity. Therefore, if the Euro declines over the next few days it will indicate that near term distribution is underway. The EUR/USD could easily trade down to the 1.266 level which was the recent double bottom support area from November 13, 2012.

Some ways of playing this potential top in the Euro is by simply selling short the currency pair. Traders can also sell short the CurrencyShares Euro Trust (NYSEARCA:FXE). Another was to play the downside on the Euro currency against the U.S. Dollar is to buy the ProShares UltraShort Euro (NYSEARCA:EUO). This is a leveraged Exchange Traded Fund that will rise and increase in value when the EUR/USD declines.

Disclosure: I am currently long the Proshares UltraShort Euro (NYSE:ARCA:EUO)

About Nicholas Santiago 575 Articles


Nicholas Santiago started trading in 1991. In 1997, he became a licensed Series 7 and 63 registered representative. He managed money for a large, affluent private client group. After applying his knowledge to his client base, he decided it was time to begin teaching those interested in learning his methods. He is an expert in Technical Analysis. He has become an accomplished technician in the studies of Elliot Wave, Gann Theory, Dow Theory and Cycle Theory. In 2007, he partnered with Gareth Soloway to form InTheMoneyStocks.Com and realize his dream of educating others about the truth of the markets.

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