Euro Fake Price Channel
Trader Moe | Oct 19, 2015 01:23AM ET
Euro Red Price Channel will Likely Break Out Downwards Before a New Channel High because It Includes the Bottom of the Previous Move
The euro has been putting in precise turns on the sides of a price channel attempt (red on chart) off the March low.
But a price channel that includes the bottom or top of the previous major move will virtually always fail. (People will try to slap parallel lines on any old price move, but these channels never meet the gold standard of real predictive value.)
What that means is that EUR/USD will likely break out through the channel bottom before putting in a new channel high.
There’s an attempt at an inverse H&S on the EUR/USD and euro futures charts, but last week, the euro killed a price channel that should have melted the price up to its neckline.
Euro Price Channel Breaks Out Downwards in Critical Decision Wave
If the H&S on this chart (red neckline) confirms with a breakout downwards, the euro has just completed a B wave before a C wave plunge. The C wave plunge doesn’t have to take out the current current low, but it has to at least retest it.
The euro is important right now because part of what’s holding the market up is a widespread belief that the Fed is about to kill the dollar again, even though the Fed continues to try to keep up the pretense that it might raise rates soon. I agree that the dollar is likely setting up an eventual plunge, but it’s not ready for the big move yet.
The Dollar is Forming a Megaphone (Blue) Across the VWAP of a Larger Megaphone (Pink) – That Usually Means that Something Bigger, Like a Triangle, is Forming
N:XLE shows the effect of this betting on an imminent dollar collapse, but XLE just retested the neckline of an H&S top on a rising megaphone (red). The rising megaphone target is far below.
XLE’s Minimum Target is the Level of the Bottom Touch on the Bottom of its Red Rising Megaphone
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