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On 1/17, Standard & Poors down graded European debt and the “Power of the Pattern” was suggesting this could be good for Europe and the Euro in the short-term. (see post here)
At the same time the U.S. Dollar was forming a bearish rising wedge up against resistance, suggesting a two-thirds chance that the Dollar would reject higher prices and move lower. (see post here)
The 4-pack below reflects what has happened to the Euro since the downgrade and the Dollar since it hit the top of the bearish rising wedge at resistance.
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Since the downgrade took place the Euro is up around 4%. Since the rejection post/top of the rising wedge, U.S. Dollar is down around 3%.
If you read the word Racecar from “Right to Left” what do you get? The same word!
The Euro hit a short-term low as the downgrade was being announced. This is a prime example that when a story gets a little too popular in the news you have a choice….go with the popular story of the day or look at it in the opposite direction.