XEU Euro Sideways Symmetrical Triangle Bollinger Bands Fibonacci Retracements

Lots going on with the euro chart as the European debt crisis plays out and will play out for years to come.  The green falling wedge, oversold conditions and postive divergence (green lines) launched the euro in late July as the ECB's Draghi stood on a soap box and announced that the 'euro would be supported no matter what'. The euro ran from under 121 to near 132 in six weeks time. The central banker interventionism is obscene these days. They only serve to create non-free markets. The pink lines show two price peaks occurring in September-October. The indicator show negative divergence which created the spank down a few days ago.  The ADX line wants to see lower lows in the euro moving forward. The RSI and MACD line are also on the verge of sloping negatively which will also want lower euro prices. The pink box for the ADX shows that the up move for the euro in September was a strong trend, and this no doubt helped the euro attain the second price peak a few days ago. The ADX is moving lower so the strong up trend is no longer in place.

The red sideways symmetrical triangle shows price tucked inside; the euro is going to have to pick a direction, and with the vertical side of the triangle about four points in length, the move for the euro should be either up and out of the triangle at 130 which would target 134, or, a collapse out the bottom at 129.25 which would target 125 (125 is the 62% Fib retracement). For sideways triangles, many times a fake out move will occur with price at about two-thirds of the distance thru the triangle. Note how the euro popped up and out of the triangle, but collapsed lower only to return to the triangle. This fake out move to the one side typically results in price returning to the triangle and exiting for the real move in the opposite direction. Hence, the triangle favors a drop out the bottom and a move to the 125 target below.

The Fibonacci retracements are shown for the up move from 121 to 132. The first retracement that the euro may target is the 38% Fibonacci at 127.31. The 50% Fib retracement is 126 and the 62% Fib is 125. These numbers will likely become important over the next month.  The Bollinger Bands show tight BB's that have squeezed out both sharp up and down moves as price moves sideways overall.  The euro violated the upper BB a few days ago coinciding with the near term top.  The euro moved back to the middle BB which would be expected after the outer BB is touched.  Interestingly, the last time the euro touched the lower BB was three months ago at the Draghi bottom. A move to the lower BB is long overdue. The lower BB, 200-day MA, 50-day MA and strong horizontal support all form a confluence at 128.30.  Thus, several downside support levels appear including the psychological 1.3000, 1.2925 (bottom rail of the triangle), 1.2900 (psychological level), 1.2880, 1.2830, 1.2700 (Fib) and 125 (triangle target and Fib).  If 1.2925 fails, start looking for 128.80. If this fails that will guarantee a lower euro. The 1.2830 would lead to 127 which would then lead to 125.

The projection is for a lower euro moving forward.  Lower euro = higher dollar = lower commodities and equities. At the time this chart was provided on 10/25/12 at 8 AM EST, the euro is currently printing 1.2987.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 10/26/12 at 5:44 AM:  The euro came down to 1.2925, the lower rail of the triangle, and bounced, now printing 1.2941, keep watching.

Note Added 10/26/12 at 8:40 AM:  The euro fell thru 1.2925, then fell thru 1.29, but is now making a comeback regaining the 1.29 psychological level. Lots of drama is on tap today.