XEU Euro Weekly and Daily Charts Inverted H&S's Rising Wedges Overbot

The euro is very much a mixed bag sitting at 1.3568 as this is typed. The currency markets are making wild moves these days. Japan is weakening the yen which sends the dollar/yen and euro/yen catapulting higher.  The U.S. and Japan are actively debasing but Europe stands by watching. Draghi will announce the ECB rate decision and conduct a press conference in an hours time. European companies are pressuring Draghi to cut rates since their products are not as attractive worldwide as the euro climbs.  The daily chart clearly shows the negative divergence spank down over the last three days. The top was a doji candlestick. If Draghi ignores the euro's dilemma and the euro pops higher, watch the thin red lines for the indicators in the right margin to see if negative divergence remains. The bounce may be short-lived and actually offer a nice opportunity for a potential EUO trade (short euro).

If the euro drops, watch to see if it drops under the lower red trend line on the daily chart. The weekly chart shows the large pink inverted H&S that now targets 148 eventually, since the 135 neckline gave way, however, do not put too much credence in this as yet.  The smaller blue inverted H&S targets 142, a gap fill.  Note how price came up on the weekly and stopped dead in its tracks before the gap fill. This action has potential for an island reversal where the euro would leap from 136.60 to 138.00.  The weekly stochastics and histogram are negatively diverged creating this weeks current pull back. The other indicators are long and strong (green lines) and want to see a higher high in the euro after a pull back.  Draghi controls the outcome. The guess would be a continued pull back this week so the red weekly candle can remain. The euro will have to come back up after a move lower in a week or two. Overall, the euro may move a lot more sideways than traders expect through 2013. The charts can be used for a path forward once Draghi provides the answer now 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 2/7/13 at 9:23 AM:  Rates remain on hold as expected and Draghi says there are risks to the downside remaining.  The euro drops like a rock, now at 1.3456. Despite the euro plummeting, the equity futures are maintaining a flat posture.