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EURUSD: triple top model nearing completion

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On Monday, the 29th of August, trading on the euro closed up. Buyers didn’t manage to reach 1.20, but renewed the Asian high from 1.1960 to 1.1986. Markets continue to feed off Janet Yellen’s and Mario Draghi’s speeches at Jackson Hole while the media is playing up Hurricane Harvey, saying that it is having a negative effect on the US economy. US 10Y bond yields have fallen to 2.11%.

Day’s news (GMT 3):

  • 09:00 Germany: Gfk consumer confidence survey.
  • 09:00 UK: Nationwide housing prices (Aug).
  • 15:30 Canada: raw material price index (Jul), industrial product price (Jul).
  • 16:00 USA: S&P/Case-Shiller home price indices (Jun).

EURUSD exchange rate on the hourly. Source: TradingView

My predictions for Monday didn’t work out. It seems that the market is playing out the alternate scenario of a triple top model. The U3 MA line held buyers up at 1.1984. After reaching a new high, the euro corrected to 1.1956, after which the price restored to 1.1979 over the course of the following 6 hours.

On the current hour, the U3 MA line runs through the 1.2022 mark. If we take a projection of the previous two tops, the target for our third is 1.2003. I’ve set the target for this slightly lower, because the Stochastic is now up, and the 202nd degree runs through 1.1990 level. A bearish divergence has formed between the price and the second top. With the three tops, a double divergence is forming.

One other factor that’s caused me to predict a slide is that the cycles on the hourly timeframe are showing a downwards trend. The euro tends to strengthen against the cycles, meaning that the longer this resistance holds, the greater the fall will be.

I reckon that it would be good for the euro/dollar pair to unload to the LB balance line. On the current bar, this line is at 1.1900. If we look at the dynamics, we should see it run through 1.1931 level during the US session. If we see growth, and the hour closes above 1.20, a different scenario will most likely play out.


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