Chart of the day: Potential for euro to rally
On Friday, the euro closed clearly above US$1.07 to complete a rounded base against the US$1.035 level, back inside the massive symmetrical triangle that has dominated for the past two years, marking a very significant change in the trend to euro weakness against the dollar since 2008. Both implied and historical volatility are low, as is so often the case at market bottoms, while momentum has yet to turn bullish despite the seven consecutive weekly rallies. Capped last week by the 26-week moving average – yet supported by the nine-week one – the Ichimoku cloud system shows no signs of turning bullish. On the other hand, there is little to stop a burst higher between now and the end of this quarter.
Nicole Elliott is a technical analyst