Euro Forecast

Commercials last went record short in the Euro currency back on August 25th. Sometimes you see an immediate sell-off and other times it takes weeks to see the market turn. This market went through a two month consolidation period and formed a head and shoulders top. This bearish pattern was confirmed on Tuesday with a close below the neckline. The downside target is around 1.1500. I think we will see prices reach this target, which also contains the 100 DMA and a 261 fib extension of an ABCD pattern formed with the right shoulder. If prices breach the 100 DMA, then I think we could see a move lower down to a volume @ price cluster around 1.1350-1.1250. I would look to sell any rally that tests the H&S top neckline. There is a strong volume @ price cluster just above it along with a downward sloping trend line, the 50 DMA, and the 34 EMA wave. This is a market to watch over the next few weeks.

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