Figure 1 is a weekly chart of the EURUSD cross rate.
Figure 1. EURUSD/ weekly
This is the same chart I
showed several weeks ago when I identified the key pivot at 1.35447.
A weekly close below this level has led to a major puke for the Euro. A close
below the positive divergence bar (marked in red) appears to have been a
clue that the move would be accelerated. (Remember, closes below positive
divergence bars often lead to acceleration in prices lower as traders sell
losing positions.)
Support now comes in at the 2009 key pivot at 1.25674. There are two positive
divergence bars that should also provide support. A weekly close below this
level would be further disaster for the Euro.
For now, it appears that the damage to the Euro has been swift, and from this
perspective it is too late to short. While the sell off has been surgical like,
the clean up from this mess is going to take a long time.
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