On Tuesday, I wrote about a multi-year pattern on the EURUSD.
I even called it the most pivotal pattern in the euro’s history.
It was a bold claim, but I stand by what I wrote.
It’s my view that the wedge pattern below will dictate the future direction of the EURUSD for years to come.
Using conservative targets, the structure above suggests a move to either the 2008 high at 1.6000 or the 2000 lows near 0.8300.
That’s about 5,000 pips above or 2,700 pips below today’s price.
It’s incredibly difficult to imagine any scenario where the EURUSD rallies 5,000 pips higher back to the 2008 high.
Furthermore, the last three months have tested the lower boundary of the wedge pattern above.
Some traders may see that as a good thing as it suggests a stronger support level.
However, I don’t share their optimism.
Repeated retests of a multi-year support level is indicative of a weak market, not a strong one.
It suggests there aren’t enough EURUSD buyers to move price off of wedge support near 1.0700.
I was so confident in my view that I announced my short position to members in Tuesday’s member-only video.
You can see how the pair broke the 4-hour rising wedge I pointed out on Tuesday, and my short is now positive by more than 100 pips.
Now, that does not mean the EURUSD can’t move higher.
Nobody knows what the outcome will be here, and that’s never been more important to understand than now.
That said, the more EURUSD sellers pressure the bottom of the wedge pattern near 1.0700, the more likely it is that the euro will capitulate.
As for the present situation, a close below the short-term trend line from year-to-date lows could push the pair toward 1.0700.