XEU Euro Daily Chart Inverted Head and Shoulders (H&S) Pattern Bollinger Bands

The euro requires attention since up euro means the broad indexes move up, down euro means the broad indexes move down.  This is due to the dollar moving opposite the euro so a weak dollar boosts commodities, copper, gold and equities and a strong dollar slaps the commodity gang.  The red inverted H&S pattern remains in place with head at 120.5, neck line at 127, 6.5 difference, thus, 127+6.5 = 133.5 target.  The blue inverted H&S would target 136-137.  These inverted H&S's are suspect, however, considering the chart as a whole.  The short red lines show how weak the indicators are wanting to see lower lows in price. The ADX shows how the strong upward trend petered out and is rolling over.

Strong support/resistance exists at 128.30. This also forms a confluence with the 200-day MA at 128.33. This is a very important line in the sand for bulls and bears. If bullish, you want the euro to stay above 128.30, move back above 129 and fulfill the red inverted H&S pattern.  If bearish on the markets, you want to see the euro collapse thru the 128.30 level and head lower, this will take commodities and equity markets with it. Last evening, the euro dropped down to the low 128's but recovered a few hours ago.

The upper BB was violated and price already came back to the 20-day MA, which is the middle BB that serves as an intial target, at 128.73, so now price must decide if it continues along to touch the lower BB, or, if it bounces off this 128.73 level, so watch this as another important indication.  In a nutshell, the market bulls win if the euro moves above 128.75 and higher, the bears win at 128.30 and lower, with no mans land in between.  The black dots show how price prefers to move from the upper BB to the lower and back again. The lower BB has not been touched in two months which hints that a touch is long overdue. An island reversal would occur if price comes down to 127 then falls thru the gap to print at 126.5 and lower. Projection is for a lower euro in the days ahead, perhaps on news of a Moody's downgrade of Spanish debt, to fulfill the chart negativity, but price should then bounce again, perhaps on news of a Spain bailout, then move sideways to sideways lower for the weeks and months ahead. 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.