XEU Euro Daily Chart ECB Rate Decision Imminent

The ECB rate decision is one-half hour away. Lots going on technically with the euro.  Note how price hit the 38% Fib retracement (blue lines) a couple weeks ago and failed to punch up thru.  The red descending triangle led the downward slide from 130 targeting 125 which was easily achieved.  The move over the last six weeks is sideways thru 123-127, or, a more specific sideways range of 124.0-126.7 (neon green lines). The bounce off the late May bottom was due to the positive divergence for the MACD histogram and stochastics. The RSI, MACD line and ROC indicators, however, all desire a retest of the 123 low. The downward-sloping 200-day MA is very ominous. The 20-day MA under the 50-day MA is bearish. Price above the 20-day MA is bullish.

The black sideways symmetrical triangle is in play right now. As the rate decision is announced, watch to see if price jumps up and out of the triangle, or, if price remains inside which sets up the move from the triangle a day or so ahead, or, if price drops out the bottom which will favor the market bears.  The vertical side is about five ticks, so if price pops up and out from 126, the target is 131 which corresponds to far higher equity markets. If price drops out the underside at 125, the target is 120 which leads to far lower equity markets and the Fed moving towards QE3. Thus, watch the move out of the triangle and keep in mind that the black triangle can be drawn with more subtle, less drastically sloped lines, in other words, the triangle can extend the sideways price action for several days ahead rather than one or two.

Also focus on price versus the 20-day MA at 125.65. Bulls are happy with price above the 20 MA, bears are happy with price below the 20 MA. Lots of drama ahead and the kickoff is only minutes away.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.

Note Added 7/5/12 at 8:34 AM EST:  ECB cuts by one-quarter as was expected. Euro falls out the bottom of the black triangle and now at 124, about to print a 123 handle, is testing the lower rail of the sideways neon green channel. Draghi is beginning the press conference right now so news bites will hit the wires. U.S. futures are flat to slightly weak. Equity markets move in the same direction as the euro.

Note Added 7/5/12 at 8:59 AM EST:  Futures turn firmly red. Draghi says that the "downside risk to growth has materialized" and traders are taking that to mean that Germany is now slowing as well.

Note Added 7/5/12 at 9:00 AM EST:  Euro drops under 124 printing a 123 handle.