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Chart of the Week May 18th
EURUSD Has formed a weekly close below 1.2500 which does not help its case. As if the Euro did not have enough problems on its hand, it has posted its 1st weekly close below 1.25 since 2006. Keep in mind after the steep fall in 2008 from 1.6000-1.2328, it still never posted a weekly close below the big figure at 1.2500. This could have some serious effects as likely technical models will get activated either closing any remaining longs, stops getting hit or new shorts being activated. Being the likelihood of this event, further downside is expected especially since virtually $1 trillion dollars were offered in aid to the EU zone yet even after all this, the pair still dropped about 6 cents on the week. So where is the pair headed?
We still have the aforementioned lows form 2008 at 1.2328 which was the weekly high in the end of January and beginning of April providing a possible support base. However considering the whispers in the market about the Euro’s existence being threatened, Greece being unable to solve their deficit, Germany being unhappy about the burden they are taking on and all the other host of problems with Portugal, Spain, Ireland and Italy – who really wants to be buying Euros now?
At this point, we feel 1.2000 is next in line and a 1.1500 print is now becoming more of a reality. Expect further downside and look to sell rallies.
Chris Capre specializes in using Ichimoku, Pivot Point and Price Action models to trade the markets. He has built and consulted for several institutions in using his Ichimoku Systems and has an Advanced Ichimoku Course for further training.
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