Ex. 1 - Long Term Divergence Cont.

The start of 2004 has a similar situation, where the advances of the dollar are not met by as much enthusiasm in terms of volume.

When the pair starts heading up in May there is a choppy (sideways) up movement. After August’s last dip the pair explodes. The A/D line follows the accumulation of EUR/USD long positions in an upright trend.

Buy Bias In Indicator

The initial uptrend in June/July that answered the earlier divergence raised the pair from 1.1800 to 1.2400. Most of July and August are spent in a ranging market, but the A/D indicator points to a bias to buy Euros. When the uncertainty of July and August are cleared up, the pair explodes from 1.2000 to almost 1.3500 in a span of three months.

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