A couple of days ago, I updated all the EURUSD charts [see: Update on EURUSD], commenting that the pair was approaching a crucial test of the channel that’s guided it for the past year or so. With this morning’s mildly positive action, things have gone about as far as they can.
Note in particular the dashed, red channel and the corresponding RSI trend line. It looks more like a very strong back test than anything else. If so, and things get going on the downside again, we should finally complete the H&S pattern (lots of those lately) and reach Point D (1.2721) of the presumed Bat without any difficulty.
One thing of particular interest to bears is the series of fan lines from the Jan 16 lows. Each has very clearly provided stair steps lower over the past two months. The latest to be back tested is highlighted in yellow and happens to form half of a rising wedge over the past 16 sessions.
This rising wedge is about 2/3 of the way to the apex (1.3335), which is also the .886 of the little Gartley or Bat that’s under construction. We reached the .707 earlier this morning, poking just above the red, dashed channel line intra-day.
A close outside the channel and above the RSI TL would be wildly positive for the euro; I must admit, I just don’t see that happening given the conditions in the euro zone vis-a-vis the craptastic picture everyone’s painting on this side of the pond.