Chart Of The Day: Is The Euro Heading Toward A Collapse?
Investing.com | Dec 09, 2019 19:16
The euro is sliding in a continued downtrend as it faces multiple pressures. The eurozone economy is increasingly sluggish, while its economic engine, Germany, is getting closer and closer to recession.
Get The App
Get The App
Europe’s economic growth has been lagging, relying on industries that are fast becoming obsolete. The continent is trailing in services, information and telecommunication — the industries of the future. Germany’s government appears unable to take any significant initiatives to kickstart the country's economy as it becomes ever more mired in coalition entanglements.
Get The App
Ironically, even as the U.S. president is facing possible impeachment, the U.S. government has just surprised the world with its strong jobs market data, boosting the dollar.
Get The App
Get The App
Get The App
The single currency has been falling within a descending channel since June 2018, with the 200 DMA realigning with the channel top, further sealing its resistance.
Get The App
Get The App
Today, the euro is squeezed between the 50 and 100 DMAs as the market awaits Fed and ECB policy decisions this week, with trade looming large in the background, both between the U.S. and China and between the U.S. and Europe.
Get The App
Risk remains on the downside, making it more likely that the common currency will revisit its October troughs, when it fell to the lowest since the first half of 2017, below 1.0900.
Get The App
And if that seems low, just look at the next chart.
Get The App
Get The App
Get The App
Note the 200 monthly MA, forming a neckline for a massive H&S top, ranging from 2003 to 2015, which proved a solid resistance when the euro retested it January 2018. If the dynamics that tend to play out after such a pattern take place now as well, we can expect the once-promising currency to compete with the dollar to take on the 1.000 levels, heading toward the 2000 lows.
Get The App
Conservative traders might choose to wait for a full return move, if one takes place, to the top of the channel and the 200 DMA, before committing to a position.
Get The App
Moderate traders may short upon a pullback to the recent highs at the 1.1100 levels
Get The App
Aggressive traders may short at will, after having written a detailed trading plan that fits their budget.
Get The App
Trade Sample
Get The App
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.