XEU Euro Daily Chart Fibonacci Retracements Rising Wedge

The euro continues to retrace the three-month down move off the late February top.  The drop in May was textbook two-leg bear flag, the first leg from 133 to 127, a difference of 6, then sideways consolidation for the flag, then down from 128.50, which is a target of 122.50. 123 was close enough for government work to satisfy the bear flag pattern. The blue Fibonacci retracement considers only the very recent move lower from early May to present.  Note how price tapped on the 38% Fib at 126.65 two days ago hesitant to punch up thru, but yesterday overtook this critical retracement level. The red Fibonacci retracements use the top in late February as the basis.  Note how the 38% Fib is 127.48 and price came up to tap this level yesterday. Consider the 127.50 level as THE key S/R level, if it is pierced to the upside, where the equities markets will run higher as well, with the euro, watch 127.80 as a final last ditch effort to stop the upward move. If the euro pushes higher it will want to run to 129.

The rising wedge is setting up for a bearish move ahead, however. Stochastics are overbot but the RSI is barely over the 50% level. The ROC and stochastics are negatively diverged (small red lines) wanting to see a quick spank down move now but the RSI and MACD line and histo (small green lines) want to see another high in the euro once a quickie pull back occurs. Once the black dot is attained, the indicators should be negatively diverged across the board that can lead to a downside move for the euro and markets. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.