- Potential topping pattern forming
- A clear move under 1.3475 should be watched closely
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The second square root progression of the year’s high in EUR/USD at 1.3475 has been very strong support over the past month or so. The level was once again tested on Wednesday, but so far has held. With the single currency unable to gain any real traction these past few weeks over 1.3600 the risk in our view is that the price action during this time has been some sort of top. Interestingly the daily chart shows a pretty clear potential head & shoulders topping pattern with the neckline not so coincidentally corresponding with the 1.3475 Gann square root progression level. This increases our conviction that a clear break of the level should be significant and opens the way for a potentially quick move towards 1.3300should it give way. Cyclically there is some risk that the Euro tries to turn higher here and rally for a week, but such a scenario is probably contingent on 1.3475 holding at least on a closing basis.
EUR/USD Daily Chart: October 16, 2013
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risks in Coming Sessions:
LEVELS TO WATCH
Resistance: 1.3530 (Gann), 1.3595 (Gann)
Support: .1.3475 (Fibonacci), 1.3430 (Gann)
Strategy: Sell EUR/USD
Entry: Sell EUR/USD on a break of 1.3465
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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To contact Kristian, e-mail email@example.com. Follow me on Twitter at@KKerrFX.