Abandoned Babies May be Good for The Holiday Markets

• Posted by Greg Harmon
• on December 15th, 2011

As I started to prep for Thursday with the Holiday music flowing and the decorations up all around me I noticed something joyous. What could it be? Well possibly a couple of abandoned babies! Not the kind that will shiver in the cold without their mothers caring for them, but the kind in the charts of a couple of beaten down currency ETF’s that if the pattern completes signals a reversal. Let’s take a look.

Currency Shares British Pound Sterling Trust, $FXB

Currency Shares British Pound Sterling Trust, $FXB, started a move lower in early November and ran lower until catching itself around the 153.25 level and moving back higher to the 50 day Simple Moving Average. Since touching there it has moved back lower and is now at that November low, printing a long legged Doji candle. Doji are signals of indecision and often reversal. If this is confirmed higher tomorrow, completing an Abandoned Baby pattern, the worst may be over for now.

Currency Shares Euro Trust, $FXE

Currency Shares Euro Trust, $FXE, is presenting an even stronger case for an Abandoned Baby pattern. The downtrend from the end of October ran a long red candle on Monday and Tuesday printed a Doji that had gapped lower. Confirming this higher tomorrow has upside back to 132 or higher.

Keep a watch on these formations. A Doji can also be resolved with a further move lower so they are not a good signal to trade off of. Wait for them to be confirmed or negated. But the recent carnage in volatile markets they are a potential bright light leading into the holidays. If they do reverse higher this may signal a turn around in the European Markets or it might just be an oversold bounce. Either way it will be a welcome breather.

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