Is That A Potential Head And Shoulders Pattern In The Euro?
Marc Chandler | Nov 25, 2017 11:53PM ET
The head and shoulders pattern in technical analysis is most commonly seen as a reversal pattern. As this Great Graphic (created on Bloomberg) illustrates, the price action appears to have traced out such a pattern and Friday's advance broken the neckline.
It is not ideal. It is not coming at the end of a large downmove, though the euro has pulled back from the two-year high set in September. Also, the measuring objective would is near $1.2150, which is above that September high. However, we note that it is near the 50% retracement objective of the euro's decline from the mid-2014 high near $1.40. The weekly MACDs and Slow Stochastics are about to cross higher.
There are a couple notes of caution. First, the euro has shot through the upper Bollinger® Band (~$1.1900). It gains over the past two sessions appear to be taking place in thin activity. Second, this coming week, there are several key events, including the likely Senate vote on its tax reform bill, Powell's confirmation hearings, and the release of the Fed's targeted inflation measure, the October core PCE deflator, which is expect to rise. Third, the US premium over Germany on the 2-year, makes it the most expensive to hold euro against the dollar since the late 1990s.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.