Today we will look at German Bunds and uses the help of this market to figure out the next possible move for EURUSD.
On the 4h chart of German Bund (Mar 2014) we see a triangle in progress that suggests higher prices once the pattern is complete. A triangle is a continuation move: a five wave pattern labeled with A-B-C-D-E subwaves, where each leg consists of three legs.
So far this looks quite nice so we can assume that the market will turn up after a wave E pullback down to the 143.40-143.80 ideal support area.
The big question is how will this impact the EURUSD?!
Well, on the overlay chart we see a negative correlation between EURUSD and BUNDS, so if BUNDS will continue higher, then EURUSD should find resistance and turn bearish. We see technical resistance on EURUSD coming in around 1.3800.
German Bunds (Mar 2014) 4h
EURUSD vs Bunds 2h
