Why outlook is grim for the euro
Political/economical ramifications have seen the pair slide. Our chartist looks at potential outcomes.
12th March 2019 09:00
by Alistair Strang from Trends and Targets
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Political and economical ramifications have seen this FX pair slide. Our chartist looks at potential outcomes.
EUR / USD (FX:EURUSD)
There's nothing quite like a "profit warning" to jolly up a share's performance and we wonder, if Brexit ever takes place, will the euro actually suffer?
Given the UK is one of the larger contributors to the EU, will the loss of this income stream hurt how the euro is perceived?
At present, the answer appears to be yes.
Presently trading at $1.123, the pairing need only relax below $1.118 to enter a phase where relaxation to an initial $1.10 appears probable. If broken, our longer term secondary calculates at $1.065. If triggered, the relationship shall require above blue ($1.142 presently) to cancel the drop potentials.
The big issue comes, should $1.065 make an appearance as this visually represents a challenge of the long term uptrend.
Movement below this trend is liable to prove extremely dangerous with parity showing as the first port of call, certainly representing a price level where some sort of rebound shall make sense.
The danger lurks in one of our favoured mindsets as the pairing will provoke a "lower low", finding itself trading in a region where the ultimate bottom is at $0.77.
As always, there's a chance we're just being panic merchants with such a foul outlook. Unfortunately, the pair requires recovery above $1.14 just to give early warning of a change of mood, this allowing for an initial $1.17 with secondary, a rather less likely $1.230.
For now, we suspect $1.065 shall eventually make an appearance.
Source: Trends and Targets Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
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