Brief Calm Before Violent EUR/USD Storm; Expect Sub-1.2000 Soon
Abigail Doolittle | May 21, 2012 12:47AM ET
Well there’s the Bear Pennant showing in the equity index charts that presents as a new and more dangerous intraday Bear Pennant each day.
As can be seen, it is drawn quite liberally with it seeming that a possible top trendline touch will come into play at any level below 1.2904. Above 1.2904, though, and EUR/USD will confirm an unmarked and weak Falling Wedge with a target of 1.3283 but below 1.2904 and the new Bear Pennant is in effect to help that confirmed Complex Head and Shoulders pattern hit its target of 1.2460.
Interestingly, this new Bear Pennant suggests a few days of sideways trading between 1.2640 and 1.2904 before it might confirm on a drop below 1.2640 for its dangerous target of 1.1997 with this pattern, then, representing a few days of hope that Europe will get it together around Greece and more broadly its sovereign debt and banking crisis before Greece or a few eurozone banks blow up. Put otherwise, the Bear Pennant above represents a brief calm before a very violent storm.
During this possible calm, though, the storm is building and when it hits, EUR/USD will be wrecked sub-1.2000 quite quickly.
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