The Euro Breaks Compression… To the Downside

The European debt crisis isn’t just taking the euro lower in terms of gold… it’s also resolving the troubled currency‘s “compressed” situation… to the downside.
 
Last month, we highlighted the euro’s “compressed” state… a situation where an asset‘s normal day-to-day volatility gradually dries up and the highs and lows move closer together.
 
While we don’t place much stock in conventional chart-reading at DailyWealth, we’ve seen too many explosive moves follow “compressed” situations over the years not to take notice of them. These low-volatility periods are often the calm before a storm.
 
As you can see from today’s chart, the calm, compressed state of the euro has ended. After frustrating bulls and bears alike with five months of choppy sideways trading, the euro has broken major support levels… and reached its lowest low since July. The famous Turtle Traders would call this move a “downside breakout.” We’ll call it the start of a downtrend… and just another reason to take Chris Weber up on the “Greatest Currency Trade of the Millennium.”