While I predicted a shift in momentum with the US Dollar by correctly identifying a Head & Shoulders topping pattern, I have been caught off-guard by the size and speed of the latest reversal.
The primary beneficiary has been the EUR/USD, registering it's largest one, two, and five-day gains. From a technical analyst's point-of-view, the latest move in the Euro has blown out all the chart readings and has what we call "gone parabolic."
The primary reason for this due to a fundamental shift. The Federal Reserve has lowered rates to historical levels and embarked on a path of quantitative easing. Meanwhile, the ECB has reminded the market of its reluctance to reduce rates further. This has enabled currency speculators to pour into Euro's, according to open interest and volume indicators provided by the Chicago Mercantile Exchange over the past few days.
So what now? Well, the EUR/USD is now in what is called a blow-off trend. A fast moving trend that is characterized by ascending trendlines. As of this writing, the third ascending trendline has now been breached. A sustained loss of 1.4460 temporarily relieves selling pressure (vs the USD) and according to my (Elliot) wave count, should set-up a consolidation pattern ahead of the next move within the current trend.
The primary beneficiary has been the EUR/USD, registering it's largest one, two, and five-day gains. From a technical analyst's point-of-view, the latest move in the Euro has blown out all the chart readings and has what we call "gone parabolic."
The primary reason for this due to a fundamental shift. The Federal Reserve has lowered rates to historical levels and embarked on a path of quantitative easing. Meanwhile, the ECB has reminded the market of its reluctance to reduce rates further. This has enabled currency speculators to pour into Euro's, according to open interest and volume indicators provided by the Chicago Mercantile Exchange over the past few days.
So what now? Well, the EUR/USD is now in what is called a blow-off trend. A fast moving trend that is characterized by ascending trendlines. As of this writing, the third ascending trendline has now been breached. A sustained loss of 1.4460 temporarily relieves selling pressure (vs the USD) and according to my (Elliot) wave count, should set-up a consolidation pattern ahead of the next move within the current trend.
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