The financial markets continue to reflect the increasing uncertainties related to the Sovereign Debt Crisis in Europe and its ripple effects on the rest of the world. With the precarious nature of the fragile period of stability currently holding the markets together, a brief analysis that captures a worst case scenario and its effect on the currency market would be of tremendous interest to Forex traders. Many of the major currency pairs that were affected by the safe-haven flows during the 2008 Financial Crisis are now moving within similar Consolidation patterns that preceded the sharp breakouts 4 years ago. However, given the much larger size of these patterns today, a major market event that disrupts the fragile period of stability could lead to even stronger breakouts over a longer time period. This analysis will therefore take a look at the potential short-term and long-term effects on the EURO USD, AUD USD & GBP USD of such an event, using the theories behind Consolidation breakouts as the basis for the price forecasts. 2008 FINANCIAL CRISIS In 2008, safe-haven flows that sought the preservation of capital through the US Dollar and the Japanese Yen led to large and …
Read article
Translate to English Show original