A long-term head-and-shoulders top warns of continued selling in EURUSD, according to Peter Lee, Chief Technical Strategist at UBS in New York.
Lee says the market action of EURUSD over the past 15 years looks “eerily similar” to that of the mid-1980s to early 2000s, with both periods witnessing a major triangle / head-and-shoulders top breakdown (see Chart). In the current case, Lee says the break below the neckline at 1.21 in January 2015 warned of a major top and this interpretation was compounded by the failure of a two-year technical base between 1.0456 and 1.0536. Lee says a break of 1.0456 signals the next EURUSD decline to 0.99-1.01, then possibly 0.9595 and maybe even as low as 0.8225.
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