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15 years of EUR/USD in Nut & Shell – Expect Further Decline

September 28, 2015 in Chart Alert

Past 8 months’ price action of EUR/USD has seen an ascending triangle formation emerging up. Now as far as any triangle chart pattern is concerned, a break out can be on either side. However, we are in favor of a downward breakout and some further decline.

The first reason is that the 17 months’ fall of the pair completely failed to even complete the 38.2% Fibonacci retracement level. We will come to the second reason shortly but before that, Yes, we are already on short-selling side.

Check the weekly chart of EUR/USD covering all the above facts including our entry for the short position.

EUR/USD weekly chart with ascending triangle formation.

Now let’s go a bit more into the past to see what we were talking about as the second reason. The following EUR/USD chart is the monthly chart of past 15 years.

EUR/USD monthly chart of past 15 years with descending triangle pattern.

It is quite evident that the resistance faced during June 2003 (yes, over 12 years back – the first red arrow on left hand side) had turned into a strong support zone and that remained in place for over 11 years.

That 11 years old support was  broken during January 2015. and since then that support seems to have turned into a resistance zone.

Let’s move on to another point and that is the descending triangle pattern which had been in place since June 2008 i.e. well over 6 years. The breakout of January 2015 was a break of a pattern which had been in place for over 6 years and that calls for some extended stay below that pattern. The support turned into resistance also favors this logic.

Please note that this alert is not for very short-term trades as we are talking about years of price-action and in such case a couple of hundred pips here and there are not even peanuts. Any upside is expected to be limited to be up to 1.1880 in the mid-term but for the immediate future we expect resistance below 1.1525 and with that a decline first towards 1.1090 and then some more.

The psychological support zone of the parity (EUR/USD =1)  seems to be the only friend of the euro right now but will that hold. Do share your comments, please.