Food for thought on the great Euro sell-off

I have been slightly absent from comments lately. I do apologise. – Lazy Summer days, vacations, commitments, Olympics etc. – Normal service will hopefully soon be resumed. 

Today I would like to draw your attention to two stunningly similar charts. – The top one is the Bund Continuation Future (German 10 Year Government Bond) from 2006/07, the second one is the EURSEK FX cross over the past 18 months. – As you can see the similarity is striking. – I have been incredibly bearish EURSEK in recent weeks, however it has hit some key fibonacci projection targets, which were always like to cause a pause in the downtrend. – However I would suggest watching out over the next few weeks to see if this pause unfolds. – There are of course no guarantees that this will correct in a similar way to the Bund correction higher of the second half of 2007, which completely retraced the Q2 2007 drop, but I think this is worth noting.

By the way for those of you with a curiosity for Technical Analysis, the pattern in both cases is a rare inverted ‘Cup & Handle’ Pattern. Whenever I mention this pattern to people it is usually met with howls of laughter and accusation that I made it up. Well it does exist and is not made-up, here is a link to a detailed description of this pattern.