We’ve had a nice run with EURUSD.  Back on February 29, we forecast a bounce on the bottom of a rising red channel.  Two days later, we had a near miss.  A week after that, the pair took another swipe at it before experiencing the biggest intraday reversal of the year.On April 18, we forecast a spike up to 1.1577, the top of the red channel, and were rewarded with a sharp reversal there on May 3.    With EURUSD having shed over 4% since then, what might be in store for the beleaguered pair?

continued for members…

The bottom of the rising red channel is the most obvious next reversal spot.  As in March, it will have to push below the SMA200 in order to reach the bottom.  And, the bottom itself isn’t terribly clear.

If we use the Mar 10 bottom to place the red channel bottom, then the reversal should happen around the white .382 at 1.1034, possibly later this week.   If we use the Dec 3 lows to place the red channel bottom, then the target is more like the red .382 at 1.0977.

Either way, EURUSD is due to reverse soon.  If it doesn’t, of course, then the downside case for equities will look a little better.  Right now, we’re seeing a fair amount of divergence between the pair and equities.So far, the falling white channel has done an excellent job of guiding prices lower.

And, EURUSD’s rising RSI channel has clearly broken down — though it’s approaching oversold territory.  Last, MACD supports a bearish outlook.

Stay tuned.