Dec EUR; pattern, price and time analysis
Dec EUR extended its gains overnight after a strong rally during Tuesday’s US session. The futures contract was buoyed by reports that Spain was set to make a formal request for financial aid from the EU.
This move would allow the European Central Bank (ECB) to begin its widely anticipated bond-purchasing program.
Although the initial report on Spain lit the flame under EUR, the rally was boosted after Spain retained its investment grade credit rating from Moody’s Investors Service.
The credit rating agency cited a reduction in the risk of losing market access as the main reason behind the investment grade retention.
Technically, the Dec EUR soared after piercing a down-sloping trend line created by a pair of tops at 1.3183 and 1.3080. The breakout over the trend line at 1.3029 Tuesday triggered buy stops and attracted momentum traders as the futures contract quickly went after the 5 October swing top at 1.3080.
Should the upside momentum continue, the 17 September top at 1.3183 seems like a reasonable short-term target.
The 1st support level is the old top at 1.3080 since according to the old adage, “old tops tend to become new bottoms”.
This is followed by an up trending Gann angle at 1.2993 Wednesday. If momentum slows then the market is likely to following this Gann angle higher. Moving at a pace of .004 per day, this angle projects a test of 1.3183 on either 23 or 24 October.
Since the market is nearing a monthly high and the rally is news driven, traders should watch for a daily closing price reversal top to signal the start of a near-term correction.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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