Is the Euro close to breaking out?

The Euro has traded in a wide sideways band for up to four months now. Trying to predict direction has been somewhat difficult in the recent turmoil of the past few months. I am sensing a possibility that we may be close to breaking out on the upside. - The next two charts will highlight my reasoning. - It is worth viewing this in the context of my previous couple of postings .

The first chart shows EURUSD weekly candles.

The second chart shows the EURUSD with a possible 'Cup & Handle' continuation pattern formed over recent weeks. - I am a touch cautious on the validity of this pattern for reasons stated on the chart, but I still feel that it should be given some consideration.

Below is a pictorial representation of an idealized 'Cup and Handle' pattern, or click on this link for further description.:

RE:EURO WEEKLY CHART - A dangerous omission

It has been pointed out to me by a good friend, that my commentary and chart of the Weekly EURUSD failed to include a bullish option. (Typically I include both a bullish and bearish options). - Perhaps that omission by me was a sign of that I (like many others) is only looking for the bearish outcome. - This omission, whether accidental or deliberate may be a signal in itself, that the market is too focused on the bearish case. If so, could this actually be a good reversal indicator in itself.  - A market overly bearish, where fear of a drop is the only option being considered.- In a similar way to the Stock market in early 2009.  Since I published that chart on Thursday, the EURUSD has done a big about turn, and right now is knocking on the door of 1.4400.


I will post a chart which considers the bullish option, which I really should have included last week.

Below is the weekly EURUSD bullish option. - A large  'Bull Flag' pattern, which has consolidated the major bull flag monthly breakout of the 2008/2011 pattern. (UPPER chart is the weekly/LOWER chart is the monthly). On a sustained breakout over 1.4440 this suggests a potential to around 1.6500 -

EURUSD - Is this a 'Bearish Descending Triangle' on the weekly chart.

Big Monday

Today's and tomorrow's market reaction to the downgrade will be crucial in establishing price action for next few weeks.. - Overnight futures on the S&P made a mild new low after gapping lower on the open, the gap has remained significant until now... However it will be what happens in the US hours which will be crucial. - The cash low on Friday at 1168 was a fraction above the 61.8% retrace of the 2010-2011 rally. - I guess this level will be significant and crucial in the short-term.

1174? -Perhaps a pause here..

If a week is a long time in politics, its a lifetiem in trading... - When a departed for a weeks vacation the S+P500 was nestling in the low 1300s having rejected 1350 the previous week... Now it sits at 1200 and the futures have been lower....

I will be brief.. I think a major bear market lasting through next year is highly likely....with a possible return to 2009 lows.

But for now - I am wondering if a temporary bottom may soon loom. Fear seems overwhelming at present and it will be very hard to actualy nail a low....- but I think a temporary low could be close... SP500 cash - 1174 is a big level for me....WHY 1174

• It was big support in q4 last year..
• It was also the rebound level after the flash crash..
• And guess where the 'Fibonacci extension' of the May top / June Bottom / and Jul rebound top is ?? 1174.4...

Further to this we ranged for a while between 1170 and 1230 in q4 before the big rally,, so that zone could offer some support..
1180/1220 was major resistance area Apr top last year... 
1190 is 50% correction of July 2010 to May 2011 Rally,,,
Also 1166 if 61.8% correction of Sep 2010 rally..

So if any sort of rebound was to occur it would be in my mind from 1170/1190 - with 1174 being the main area,,,,

AUDUSD has moved back down to 1.04 where major support held over recent months....- Certainly worth banking some profit there if you were short (I think) ..