XEU Euro Long-Term Multi-Year Chart Descending Triangle Head and Shoulders (H&S)

Technical analysis is all about time frames from a few minutes, to hours, days, weeks, months, years and decades. The euro action is framed nicely within a longer term context. Note the descending triangle in play. If the 120-125 level fails, that path to 80-95 is on tap. Remember, we are talking multi-year moves. Should the descending triangle play out it may take five to eight years.  A head and shoulders is also in play with neck at 120 and head at 160 targets 80 should the 120 fail.

First thing is first, however, and the euro is rockin' higher without a care as Europe sinks deeper into recession and depression with growth dropping. The euro must be weakened to spur growth in Europe or the entire continent may explode into chaos considering the escalation in social unrest. The 200-week MA at 1.3528 was pierced this morning to the upside. In 2003, the Iraq War Rally, the euro remained above the 200 for about seven years. In recent years the euro has danced to and fro across the 200. Purely from a reversion to mean standpoint, a more extended stay under the 200 would be favored rather than a move above, but, alas, today the euro moves above.

The indicators favor sideways movement overall and the recent action has set up negative divergence and overbot conditions although the RSI and MACD lines maintains a long and strong profile wanting to see another higher high after a pull back occurs. The downward-sloping upper rail of the descending triangle slices down thru this current 135-138 zone which sets up an ideal place for the euro to top out. Projection is for the descending triangle pattern to continue to play out with the euro topping in this 1.35-1.38 zone over the next month or so. Draghi should weaken the euro at some point.  The ECB meeting announcements are the first Thursday of each month so pay attention to those dates moving forward since Draghi would hint at or announce a rate cut at these meeting. 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.