Tuesday, August 18, 2009

What Does a Very Bullish Chart Look Like?

Like this:

The chart is of the euro versus the dollar. It appears, the chartist, Biiwii, is expecting a short-term pullback in the euro, based on his labeling on the chart. But, I'm looking more long term. If the euro breaks above the overhead resistance (Red horizontal line on the chart), the up move in the euro would most likely be spectacular.

The Fed, as I have been reporting, is very tight with the money supply (M2 nsa), so for a euro bullish scenario to play out, foreign holders of dollars would have to start bailing out of the dollar. Nothing suggests that this is going to happen at this time. But, damn, that is an interesting chart.

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