A combination of risk aversion and a weaker German economy pressured the March euro on Tuesday. Traders flocked to the U.S. Dollar for protection in anticipation of a possible stalemate in the debt ceiling hike negotiations. Despite stimulus, bailouts and austerity measures, the German economy finally showed signs of weakening. Euro traders feel that this is a sign the euro zone is poised for a double-dip recession.
The March euro traded sharply lower after reaching a near-term high on Monday at 1.3413. The move triggered a quick move beyond the previous top from December 19 at 1.3321. This was a sign that the last rally was likely short-covering rather than new buying.
The market stopped and reversed late in the session after testing a Gann angle at 1.3285. The actual low was 1.3270. This angle moves up to 1.3325 on Wednesday. Overnight, the market opened under this angle, putting in a weak position from the start. This sets up a potential move to another uptrending Gann angle at 1.3165.
Downtrending resistance should be tested early at 1.3333. This price actually forms a resistance cluster with the uptrending Gann angle at 1.3325. A failure in this 1.3333 to 1.3325 zone could trigger another sharp sell-off since there is not clear support until the retracement zone at 1.3209 to 1.3161. If the Euro manages to rally through 1.3333 then look for a possible test of 1.3373.
Although the main trend is up, there is a slight bias developing to the downside. Further weakness could be triggered by headlines regarding the U.S. debt ceiling issue or additional weak economic news out of Europe.
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March Euro Set Up For Break Into Retracement Zone
Published 01/15/2013, 11:33 PM
Updated 05/14/2017, 06:45 AM
March Euro Set Up For Break Into Retracement Zone
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