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For the past 2 and half weeks, the Euro has consolidated and fought to hold its daily neckline stemming from the February - March lows. This was breached on the 16th of March as the Euro hit lows of 13000, however quickly recovered and closed back above the trend line. This shake out has seen the market continue to hold above its neckline, however meeting major resistance at the 13200 level. Last Friday we saw the Euro close on highs hitting 13232, only to turn back lower on Monday and retest its breakout point. This is at a critical level for the Euro as if this market is indeed ready to move higher, these Monday lows of 13107 should be supported for buyers to take out the Monday highs of 13214 to show their strength of pushing back above 13200. In turn the next major resistance comes within 13280-13387 from where the market broke down on April 2nd, as the range for buyers to squeeze through to target the February highs of 13488 and ultimately complete the retracement to 13800.
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As the US dollar was premature in its breakdown late March, we saw the market squeeze back higher to retest the March highs from where it failed the year highs within 8073-82045. Thus far the US dollar has backed away from this test of the March highs, putting in a high of 80380 in April, forming a right shoulder for this 3 month consolidation period, and slowly coming back down to retest its neckline stemming from the February - April lows. On Monday we saw the dollar see a relief rally as once again forces worked hard to keep this afloat and bounced the market from its daily neckline. This led to Friday's highs of 79745 to be clipped, putting in highs of 79775, only to fail to hold above and see sellers fade the move. Going forward a strong market should continue to move higher and past this high to target the April highs of 80380 being the right shoulder of this head/shoulders pattern, to target the head at 81160 from March and put the ball back in the buyers court. Until then, this market remains weak and in the hands of the sellers who have a better opportunity to break the market lower as short squeezes have seen the year highs tested and fail, followed by the March highs tested and fail. In turn this has created this head/shoulders pattern with the rising neckline from the February - April lows. Sellers should look to break these Monday lows of 79320 to break this neckline and target the April lows at 78795 to confirm this formation and complete the move down to retrace into the October lows at 76460-74860 which were never retested as the market put in that false breakdown and squeezed into 8200 this year.
