The day to day pattern in Dow Theory is measured as several days to many weeks and is a reflection of the day to day fundamental activity in the market place. The current day to day trend in the Euro shifted to bullish on 10-10-11, and has been bullish since holding support above 136.00 over the last 3 days.
It was significant in our analysis that the event that put the market in a position to shift that day to day trend higher in early October was then ECB President Trichet announced policy changes based on quantitative easing to back-stop the debt crisis. By taking a page from the U.S. Fed and Treasuries play book, the ECB took a route which, if believed by major market participants, would also put a bid in global stock indices. And that it did, along with having the added effect of keeping the Euro above 130.00.
Following incoming ECB President Mario Draghi’s conference today it looks as though the torch has been successfully passed, and the European currencies performance over the past month is a testament to the respect traders and markets are currently showing the ECB.
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