ECB President Lagarde conducts the monetary policy meeting on 7/16/20. The euro weakens that day and then the launch begins from sub 114 to 115, 116, 117 and 118 plus. The stronger euro sinks the dollar which creates heavy buying in commodities and commodity stocks pumping the US stock market higher. An astute reader, Sunil, pointed out the cup and handle (C&H) pattern on the euro daily chart (brown).
The base of the C&H is 108 and the brim of the cup is 114 so that is a six-point difference. If price breaks out above the brim, the target is 120 (114+6). Price breaks out higher after the ECB meeting in mid-July. Thus, 120 is an upside target, however, the neggie d has something else in mind. If the euro is spanked down due to the neggie d, a back kiss of that brim breakout line. The C&H would have been a textbook pattern if it would have back tested after the breakout occurred.
The red lines show the matching or higher highs in price occurring but the chart indicators are all negatively diverging indicating a top in the euro right now on the daily basis. You can nitpick the MACD line, maybe it is not flat and negatively diverged, maybe it is sloping a hair higher, if so, then the top is Tuesday or Wednesday on this daily basis.
The purple hours show three tight band squeezes one was down and two up. The upper band is violated so the middle band at 115, and rising, is on the table as well as the lower band at 111 and change.
Euro up = US dollar down = commodities up = gold and silver up = US stocks up.
Euro down = US dollar up = commodities down = gold and silver down = US stocks down.
The euro weekly chart shows the parabolic pop in price and long and strong RSI, MACD and histogram over last three weeks. After the weakness plays out in the daily time frame due to the neggie d shown above (a few days), the euro should resume the upward trend due to the weekly chart and march towards that 120 C&H target. Keystone does not have any positions long or short in the euro or dollar currently. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
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