Euro / U.S. DollarShort
Eurodollar entering panic mode
I'm a bit late in publishing this idea, because I've had this chart for a while now and shared it on twitter multiple times. What I've done here is simply copying the 2014-2015 drop out of the wedge and pasting it onto the more recent wedge. What is interesting here is that the RSI usually leads the way and breaks its trendline before we drop out of the wedge. I use RSI all the time as it is one of the most predictive indicators.
Another thing to note is that the false breakout in 2020 makes this scenario even more bearish. False breakouts and false breakdowns are often a sign that violent moves in the opposite direction are coming up (think crude oil's drop below zero in 2020 and what followed after that). One might argue that RSI is now in oversold territory and while that is true, once RSI drops below 30, it often sees the strongest moves down. We might be halfway into the descend or possible a bit more than halfway, but we should see EURUSD drop well below parity and most likely, we will see a reading we've never seen in the Euro's history.
Another thing to note is that the false breakout in 2020 makes this scenario even more bearish. False breakouts and false breakdowns are often a sign that violent moves in the opposite direction are coming up (think crude oil's drop below zero in 2020 and what followed after that). One might argue that RSI is now in oversold territory and while that is true, once RSI drops below 30, it often sees the strongest moves down. We might be halfway into the descend or possible a bit more than halfway, but we should see EURUSD drop well below parity and most likely, we will see a reading we've never seen in the Euro's history.
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