This article (if you'd like to call it an article) will be strictly technical and based on andrew's pitchfork analysis of the weekly and daily charts of EUR/USD. So here are the charts:








This is an analysis of the pitchfork, which, as you can see in the first weekly chart, is respected by the price action, meaning that the median line served as strong support in Q2 and Q3 of 2015. Then at Q4 we broke this support and revisited the 1.05 region, which has both strong psychological and volume wise barrier, ie. bids are very strong at this level.

The euro just can't keep falling forever as the short trade is way too overcrowded. This gave rise to the short squeeze on the ECB event, where just in one day bears got ripped apart. This is the turning point for the euro, as all the fundamental dire straits have been priced in over the last year or so. Holding a euro short position these days feels like holding a hot potato, where fund managers are looking for a way and excuse to cover the shorts (preferably before year end). By an excuse I mean any event that will bring about volatility and volume, for example, even if the NFP's are a blowout number then they will cover their shorts into that panic selling of the euro.

These short squeezes can get very nasty as we have seen on a couple of occasions, 200 pips in 2 min, no problem. If you draw a smaller pitchfork from the ECB event to the top and extrapolate it to the lower boundary of the major pitchfork at around 1.07 you will get a rising pitchfork as seen in purple. The green line is extrapolated as my forecast till the end of January 2016 (where the red arrow is) - that is where the price would hit the median line of the major pitchfork and also be at the intersection of some major resistance on the weekly (less to say, close to the median line of the minor pitchfork in purple). I'm forecasting a major washout of longs in the first week of January, at least that's what the big banks do before ramming the price up. After the wahout the price should coil around the median line of the minor pitchfork.

Pitchforks are simple tools, but at the same time they are effective (see how the price respects the pitchfork on the weekly). It is one of the few tools that do not lag and gives you a glimpse of what the future might bring. Price has a tendency to move towards the median line, providing that it does not breakout of the pitchfork, hence invalidating it.

I believe that the fundamentals of the euro economy have all been priced in and that the euro will now move more on a technical level compounded with short squeeze bouts.
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