Closing Price Reversal Top Pattern Pressuring Euro

The Euro is trading lowerafter posting a high at 1.4247 on Tuesday and forming a closingprice reversal top. Downside pressure overnight confirmed the chart patterntriggering what is likely to be a short-term retracement back to 1.4000 to1.3947.

The Euro is trading lowerafter posting a high at 1.4247 on Tuesday and forming a closingprice reversal top. Downside pressure overnight confirmed the chart patterntriggering what is likely to be a short-term retracement back to 1.4000 to1.3947.

The short-term range is1.3752 to 1.4247. Forming inside of this range is a set of uptrendingGann angles at 1.4072, 1.3968 and 1.3913, making for an interesting supportcluster inside of the retracement zone at 1.4000 to 1.3947.

Expectations are for themarket to find a little support inside of this zone on its first test. Ifanything, trading is likely to be labored in this area as both longs and shortsfight for control. Holding this zone would produce another higher bottom in theuptrend, but a breakdown of Gann angle support will likely mean that a moresevere break is in the making.

Fundamentally, sovereigndebt issues continue to plague the Euro. The single currency just can’t seem toavoid lingering debt woe issues, particularly involving Portugal thistime. On Wednesday, the Portuguese parliament is expected to reject theminority government’s call for additional austerity. This will likely lead tothe resignation of Prime Minister Jose Socrates, and force the country to tapaid from the European Union and the International Monetary Fund.

Additional pressure on theEuro is forming as European Union leaders get ready for their two-day summit inBrussels. Thepurpose of this meeting is to sign the final agreement that coordinateseconomic and governance measures. In return the EU will receive strongerbailout mechanisms. The developing issue remains providing short-term aid whilebalancing long-term budgets. If struggling countries continue to request andreceive aid over the short-run, then it will be difficult to reach longer-termbudgetary goals.

While this issue remains outthere, the EUR USD is expected to remain under pressure. The selling couldescalate if EU officials walk away from Brusselswithout a comprehensive solution.

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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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