As I was looking for yesterday, the euro has now had the breakdown of the big head and shoulders top pattern confirmed with a second daily close below the key support at $1.3475. The implied target for the medium to longer term is now $1.3000. All technical indicators now look very bearish and the outlook suggests only downwards from here. The only caveat to the bear picture is that the RSI is now around 29 and is beginning to look stretched. Whilst the RSI can sustain below 30 for a period of time the chances of a technical rally are growing. That makes the immediate strategy a bit tricky as to whether you should chase the euro lower or wait for a bounce to sell into. The riskiest strategy of all would be to buy the euro, but this is not recommended. There is a band of resistance now that starts at $1.3475 and then at $1.3500 and $1.3550. I would be looking for a bounce to sell into. The next downside target is at $1.3375 which is the downside target from the original double top.
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