THE LEI NON CONFIRMATION

Unlike EUR RON which has pushed above 2004 high, RON DOLLAR is still below respective time levels. What does this mean? This means that RON has not weakened as much against DOLLAR as it has weakened against EURO. One can make another observation here. Not making a new high against one currency and making a new high against the other is a non confirmation.
Just like prices need volume to suggest a real turn around, a continued weakness on LEI can only happen if RON DOLLAR also breaks above 2004. A failure to do this would suggest that LEI has something else in mind compared to what the market thinks regarding the direction the local currency should take for 2009.
Non confirmation at a four year key level is no joke and suggest that prices could indeed be at a reversal level here. Either RON DOLLAR should break above 2004 levels, or we can expect that the anticipated final exhaustion we are expecting on LEI should be nearer than farther.
The classic ending diagonal formation (illustration) on RON DOLLAR compared to CONTRACTING TRIANGLE we illustrated last time (trading an extension) also brings out this difference clearly. Ending Diagonal is a terminating five legged pattern (a-b-c-d-e) while Contracting Triangle is a continuation formation. Anticipated strength on LEI also validates our MAR reversal case on equities. Though we are looking at JUN for a 13-15 month turn around on Global equity including Romania, the inter asset (currency, equity, energy, metals) bottoms may illustrate some leadership i.e. earlier tops and earlier bottoms compared to its other asset peers.
The latest WAVES.FOREX report carries CYCLES on RON DOLLAR and EUR DOLLAR. RON DOLLAR CYCLES suggest that prices don’t have much further up to go. This seems in sync with the EUR DOLLAR, which could see some minor weakness ahead. We have carried ANTICIPATED and HAPPENED cases on Indian Rupee and Yen. The FOREX market seems to be heading towards an intermediate reversal time window (MAR). We will keep you posted.