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Dark days for the euro could be coming to an end - Blackwell Global

FXStreet (Łódź) - Ross Woodfield, analyst at Blackwell Global Investments Limited suggests that a trend reversal might be in store for the euro, which seems to have formed a reverse head and shoulders pattern.

Key quotes

"In most cases the trend is your friend as they say, but unfortunately the Fed has the power to invalidate any trend. Nevertheless, the silver lining is that a head and shoulders pattern has coincided with the breakout of the bearish trend. This is a rather bullish sign and could point to a significant pull back for the Euro."

"There is more data that could yet invalidate the reverse head and shoulders pattern today. We will see the ECB monthly bulletin and a speech by ECB president Mario Draghi which could add volatility to the EURUSD pair, especially if he hints at the possibility of more stimulus. We will also see the weekly US Unemployment Claims which have been showing a positive trend recently, underpinning the strength in the US dollar."

"If the price pulls back and rejects off the neckline, we will have confirmation of the reverse head and shoulders pattern. The distance from the neckline to the ‘head’ is 192 pips, meaning the target for this pattern will be 192 pips above the neckline, or at 1.2874. Look out for other levels of resistance which will be found at 1.2827, 1.2922 and 1.2978."

"The minutes from the last FOMC meeting invalidated the bearish trend. A reverse head and shoulders pattern is now forming that could point to a bullish movement over the short term."

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