Thanksgiving Over-Indulgence or the Euro Causing Indigestion

• Posted by Greg Harmon
• on November 27th, 2014

                                                                                 “Its just a wafer thin.”

Thanksgiving is the one day of the year where your mother, grandmother or wife does not yell at you for taking seconds or maybe even thirds for dinner. A rite of passage that we are allowed to stuff ourselves to the point of excess this one day a year. Maybe that is why you need to have Tums or Rolaids or something to settle your stomach.

Or perhaps you did not overindulge and you still have indigestion because you are long the Euro. The chart below shows the path of the Euro against the US Dollar since 2000. It shows a strong move higher from 2000 to a pause from 2004 through 2006 before an equal move higher.

But from that high at 1.60000 (seriously currency traders how many digits do you need?) it has been building a descending triangle. Lower highs followed by a retracement to the same support zone.

If you extend that falling trend line it would cross the support zone at the end of 2019, an 11 year triangle from the top. That is interesting to a technician because it is just short of two thirds of the way through the triangle. This is where the most powerful breakout moves happen.

With the Euro back at that support zone again, the knots in your stomach could be from the possibility of a break down. The momentum indicators support that. And a breakdown would target a move to the high 80’s in the Euro. Right back to where it started the process 12 years ago.

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