The Euro is expected to complete its second shoulder bottom of the Inverted Head and Shoulders formation on Weekly and Daily at 1.26 (Fibo 50.0 of 1.2054-1.3176), before the price will advance signficantly higher (1.31-1.32 expected this year).
Recent price action indicates a potential bottom as the weekly/daily 1.2054-1.3176 ascending wave has had a 530 pips drop near its Fibo 50.0 level where it now completed a bullish weekly candle and on Daily is testing its faster MA after it broke above the 200 day MA and holds above the Fibo 61.8 level of 1.2730 before heading higher for a test of the 1.2800 resistance.
After the Head and Shoulders is confirmed, further weekly advances higher will meet important resistance at the range's middle resistance of 1.3498 and the confluence zone of the 200 period MA and the faster MA, as shown on the Weekly chart.
On the Daily chart, the price has been rejected at the ascendent support of the uptrend channel and is holding above its 200 day MA as it tests its faster MA and reaches for a test of the 1.2800 resistance.
Our setup is to buy on a break above the 1.2800 level at 1.2857 with a stop loss below the range and the channel support at 1.2751 and a target near the range resistance at 1.3094.
On H4 the price is holding above its 1.2742 pivot and is testing the faster MA before heading to the 1.2835 level.
Our setup is to buy on a break of the 1.2835 level at 1.2858 with a stop loss below the range at 1.2801 and a target at the middle of the range (1.2963) with a extension available at 1.3182.
The H1 chart provides a more short-term long opportunity on a break above the Fibo 100.0 level of 1.2690-1.2786 with a buy at 1.2810, a stop loss at 1.2789 and first target 1.2850 with a extension target at 1.2900.
Our most important reasons to be long on the Euro are:
- The escalation of military conflicts between Turkey and Syria
- The escalation of military conflicts between Israel and Palestina
- Brent Oil will reach $115
- Fed will keep interest rates near 0 and will continue QE
- A cheap dollar which is needed in the post-Sandy reconstruction
This week will bring important events and econonomic data releases for both the Euro and the US Dollar.
Expected EU and US Economic Data for 19 Nov - 23 Nov
Existing Home Sales at 5:00 pm expected to rise slightly from 4.75m to 4.76m
German Bundesbank President Weidmann Speaks at 10:30 am
Building Permits at 3:30 pm expected to drop from 0.89m to 0.87m
Housing Starts at 3:30 pm expected to drop from 0.87m to 0.85m
FOMC Member Lacker Speaks at 4:00 pm
Fed Chariman Bernanke Speaks at 7:15 pm
German PPI at 9:00 am expected to drop from 0.3% to 0.2%
Unemployment Claims at 3:30 pm expected to drop from 439k to 397k
Flash Manufacturing PMI at 4:00 pm expected to rise from 51.0 to 51.2
Revised UoM Consumer Sentiment at 4:55 pm expected to remain unchanged at 84.9
Crude Oil Inventories at 5:30 pm
French Flash Manufacturing PMI at 10:00 am expected to rise from 43.7 to 44.1
French Flash Services PMI at 10:00 am expected to rise from 44.6 to 45.3
German Flash Manufacturing PMI at 10:30 am expected to drop from 46.0 to 45.9
German Flash Services PMI at 10:30 am expected to rise from 48.4 to 48.5
Eurozone Flash Manufacturing PMI at 11:00 am expected to rise from 45.4 to 45.6
Eurozone Flash Services PMI at 11:00 am expected to rise from 46.0 to 46.1
EU Economic Summit Day 1
German Ifo Business Climate at 11:00 am expected to drop from 100.0 to 99.6
Belgium NBB Business Climate at 4:00 pm expected to rise from -13.5 to -13.2
EU Economic Summit Day 2
Goldenschild Asset Management