The break early this year of 1.2875 - low recorded back on 10th January 2011 - is just confirming
things should get worse for the EUR/USD in 2012. The head and shoulders pattern that took place in
2011 calls for much lower prices in 2012.
First “logical target” is set at 1.1880, previous Dow Theory pivot point made back in June 2010. A break
below this level can open basically the parity mark, but this is another story at this stage. Resistance set
at 1.3240/60 will be now very tough to break – thus, price tend to retest the head and shoulders
neckline before continuing its course (not a must, a possibility). First support is set at 1.2580 and
should be the next meeting point for the bears and the bulls. 1.30 remains the first serious
psychological resistance barrier.
A head & shoulders pattern is in place, with its neckline acting as resistance (1.3250). This bearish
patterns calls for a target of 1.1270 – the head equals the distance from 1.4940 to 1.3000 and the
neckline was broken at 1.3210. Subtracting the 1940 pips from 1.3210, targets roughly below 1.13.
Only a move above previous Dow Pivot level will cancel this scenario – in other words 1.4270. Sell
rallies is favored, with the region of 1.3250 being now the first barrier bulls shall conquer to pressure