Monday, September 10, 2012

Euro Breaks Out of Key Weekly Channel

The above chart is a weekly chart of the euro.  The chart has been in a downward sloping channel for roughly the last year.  Last week, prices broke through upside resistance, printing a strong bar on high weekly volume.  This is an ideal example of a textbook breakout for a chart.  It also signifies a fundamental change in the markets attitude toward the euro.  For the last year, the EU has been a net drag on the overall trading environment for obvious reasons.  However, last week's announcement by the ECB obviously provided a strong enough change of events for the currency markets to start taking net long positions in the euro.