Thursday, March 26, 2009

Zignals Stock Chart: EURUSD Bull Flag

Last Wednesday I commented on the mounting pressure against $1.29 resistance which suggested a potential break was coming. The trigger for the break was the Fed decision to buy back its debt.

The latest scenario to wobble the dollar came from Tiomthy Geithner's suggestion he was open to a global currency. He later corrected himself but the 'worry' is lingering within a technical pattern which is considered bullish (for the euro / bearish for the dollar) termed a 'bull flag'.

The pattern has strong measuring implications and should clearly defined resistance break then the dollar could be in for another sharp period of pain, not helped by Timothy's comments floating in the air.

The projected target is for another $0.1283 to be added to the point of the bull flag breakout. If we use $1.3783 as the resistance price then the upside target for the EURUSD is around $1.5066 - although this target is likely to be a little lower given the bull flag will break before $1.3783 is cleared. Looking at the chart there is an historical resistance level from last August and September at $1.4909 and $1.4868 respectively; this looks to be a more reasonable projection to call.

The risk for the position is below $1.3400

I have made a fresh call for the EURUSD available here.

Dr. Declan Fallon, Senior Market Technician, the free stock alerts, market alerts, and stock charts website