CurrencyShares Euro Trust (FXE)

EUR/USD: The Euro hit $1.60 April 2008, then retraced to $1.25 October-November. Now $1.41.

If Euro breaks $1.60, it could form a fifth wave up. But the dependence of Europe upon exports suggests that their economies cannot support a much stronger Euro. This would be an unstable period that would sooner or later top and reverse.

EUR has support around $1.30 and $1.25 (9-month low). But Fibonacci says EUR could retrace to about $1.15... the lowest since October 2003. And if it can break these levels (and some support around $1.10-$1.05), it could fall back to? parity.

In the short term, FXE is failing at a test of resistance at its 2-month highs ($1.43). Stochastics are failing to form a new high on this test of resistance, confirming the case for a reversal, which has already formed 4 consecutive bearish candles.
During the run-up to this level 2 months back, the stochastics were very overbought for an extended period. Stochastics fell sharply, but FXE remained range-bound near the 1.43 highs. These divergences suggest that another selloff may be in store.