In my last post, I drew attention to a Wall of Resistance that has yet to be breached by the Euro in its attempt to rise in value versus the US Dollar . It is now heading towards the Wall once more. Will it breach the Wall? Probably not in this assault; It will, I think, swing down as soon as it touches the wall, to launch a stronger assault next time.
Tuesday, 22 March 2016
This time last year, many punters were expecting the Euro to keep falling until it reached parity with the US Dollar. Then on the Ides of March 2015 the trend reversed. Since then EUR/USD has met a wall of resistance at $1.146. Now on a downswing, we wait to see if its next rebound (from around $1.10) will take it crashing through this wall.
Friday, 18 March 2016
In January, I drew the dotted-green "Projected Upslope 2016," based on the long-term pattern. The Euro has trended upwards against the US Dollar since then, keeping just clear of the projected upslope. The Support Zone (green triangle) was breached, indicating a modification of the Channel: the purple box. Taking this as a guide, I would say that the graph is back in the Resistance Zone now, ready for a downswing soon.
Click to enlarge.
Paradoxically, it is bad economic news that caused the markets to rebound, and, apparently, right out of the downtrend. Poor figures led to the FED announcing that the interest rate hikes will be slowed for the rest of the year, and this led to the rise in share prices as money headed back to shares rather than bonds. We may, however, now be at a peak, from which prices will drop again. I will watch and see which of the purple trend lines give way: the Resistance Line to indicate a reversal of the downtrend, or the Support Line to indicate its continuance.