"Head & Shoulders" in EUR/USD

DailyForex.com Team

By: Bastian Rubben

The US stock markets closed last week with a strong finish on the background of improving employment statuses, as the US economy created 227K new jobs during the past month. As I warned here after the sharp declines that occurred Tuesday, the investors took the opportunity to push more money into the stock markets and those who thought that a significant bearish correction was about to begin and opened short-positions, and are now facing great loses.

The encouraging fundamental data supported the USD against the major currencies despite the risings in Wall Street, which usually has a negative correlation with the USD. Likewise, there were developments that weakened the Euro, and the main one was the official declaration of a Greece default. Everybody expected this announcement for several months but the official report had a strong bearish influence on the European currency.

On the technical matter, the EUR made the bearish pattern "Head & Shoulders" on the daily chart against the USD. As you can see, this is not an accurate pattern that gets support on an accurate supporting-line and therefore it is harder to point out on a specific level for opening a short-position. However, if the break-down succeeds, the Euro might fall down to the level of 1.28, but before that it will have to break-down the support at 1.30. Nevertheless, we might see the EUR recover from the current support and if it crosses above 1.33, it will be a bullish signal for the currency.

EUR/USD Daily 3/12/12

DailyForex.com Team
The DailyForex.com team is comprised of analysts and researchers from around the world who watch the market throughout the day to provide you with unique perspectives and helpful analysis that can help improve your Forex trading.

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