Euro Posts Reversal Top after Irish Bank Downgrade

The EUR USD posted a closing price reversal top on Mondayafter Moody’s Investors Service said it cut Anglo Irish Bank’s unguaranteedsenior debt to Baa3 from A3, and cut its dated subordinated debt to Caa1 fromBa1.

The EUR USD posted a closing price reversal top on Mondayafter Moody’s Investors Service said it cut Anglo Irish Bank’s unguaranteedsenior debt to Baa3 from A3, and cut its dated subordinated debt to Caa1 fromBa1.

The chart pattern suggests a possible top, but the pace ofthe break from the top may be hindered by lingering concerns that the U.S.Federal Reserve will engage in quantitative easing.

Technically, I had been anticipating a possible top or atthe least a technical bounce once the Euro reached the 50% price level of the main1.1876 to 1.5144 range at 1.3510. The current rally reached 1.3507 beforesellers stepped in.

If confirmed by at break through 1.3424, the Euro may begina correction back to 50% of the 1.2644 to 1.3507 range. This price is 1.3075.

The technical pattern is clear, but in order for this tocome to fruition, it needs the cooperation of a couple of fundamental factors.Sovereign debt concerns are likely to be a bearish driving force, but this newscould be negated by bullish economic news from the Euro Zone or more bearisheconomic news from the U.S.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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