XEU Euro Daily Chart Inverted Head and Shoulder (H&S) Patterns Key Support at 128.30

The euro formed a tweezer top (tiny circle) and collapsed. The 128.30 level is very important horizontal support and this level also forms a confluence with the 200-day MA at 128.38. This is an important line in the sand.  The euro is printing 128.55 as this missive is typed. If 128.30 is lost, the equity markets will cascade lower for another leg down. The market bulls need to defend 128.30 with all their might.  The pink lines show the inverted H&S we watched a couple-three weeks ago with 127 as the neck line. Price blew up through there when Draghi fired his bazooka on 9/6/12 and has not yet back kissed.  The blue lines show an alternate inverted H&S with the neck line at the important 128.30. Price has not yet back kissed here either but that appears on tap for today. The pink inverted H&S pattern would target 133.50 and the blue lines would target 135.50, however, with the need for Europe to actually decrease the euro in value, to help bolster manufacturing, especially in Germany, to provide a growth engine, the inverted H&S targets may never be achieved.

The black ADX line shows how the trend down was very strong in May moving into June, then the trend petered out to signal the price reversal in July, along with the positive divergence. Draghi said he would support the euro by all means necessary on 7/26/12 marking the exact bottom in the euro.  The ADX then shows a strong trend up for the euro in September. The indicators are all weak and bleak (red lines) wanting to see lower lows and that is occurring today.  Watch the fight for 128.30 since it will tell you the market direction. Bounce from 128.30 and bulls realize a sigh of relief and quickly grab the booze to start the party again. If the euro collapses thru 128.30, the equity markets will move decisively lower.  The euro is now printing 128.53..........   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 9/26/12 at 4:09 PM:  The trading day occurs with the euro keeping its head above water the whole time, staying above the critical 1.2830-1.2850 area. The current euro print is 1.2867.