Euro May Not Be Bottoming
The Euro is carving out a pennant formation at the upper range of its recent consolidation. A breakout above the 38.2% retracement level off of the recent precipitous decline may initiate a strong selloff in the dollar which may also correspond with more upside in equities and commodities. It's worth keeping your eye on and maybe even worth entering for a trade.
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Permalink Reply by Steven Vincent on
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A flag pattern continues to build in the Euro which suggests an eventual breakout. Support in the 1.45 zone has held several times. An upside breakout suggests higher prices for equities and gold and commodities may be in the offing.
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1/13/09 UPDATE:
The daily chart is showing what appears to be a rising wedge pattern with the 50 EMA and 38.2% Fibonacci level acting as resistance and the 200 EMA as support. This is not a very bullish setup, particularly in light of the Euro's failure to rally on a bullish day for stocks and metals. The next move to the 50 EMA may be rejected yet again, initiating a new selloff and potentially lower lows. Caution is warranted.
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The pattern has broadened out a bit but there's still a rising wedge. These things tend to take a lot of time to develop and tend to grow out to the apex so there may not be a trade here yet. Something to keep our eyes on.
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The rising wedge has broken strongly to the downside and a retest of the lows may be in order. It's possible that the long-dollar-on-economic-growth trade may reassert itself here, as dollar is rallying strong across the board off of Intel's strong earnings and outlook.
This may be worth a trade.
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