EUR/USD Forecast October 27, 2017, Technical Analysis

The EUR/USD pair cratered after the press conference by Mario Draghi, slamming into the 1.17 level. This is an area that is crucial, because it is the neckline on a longer-term head and shoulders from the daily chart. If we can break down below the 1.1650 level, I think at that point we will have confirmed that move, and it’s likely that the market will go looking for a move towards the 1.15 level, and then possibly even the 1.13 level. We are at a crucial junction as I record this, so it’s likely that the market will be making a serious decision. We already know that the market has been a bit oversold during the day, so I suspect that we could get a bit of a bounce. The question now is whether we can hold this level. If we do not, I would be aggressively short of this market although I would also anticipate that there is a lot of opportunity for traders here.
Having said that, there’s a lot of noise in this market and a breakdown could be coming, after Mario Draghi was less than hawkish. There are reports that Janet Yellen is out of the running for the Federal Reserve Chair, and that of course could mean that we are going to get a more hawkish Federal Reserve. We could be seen a reversal of the entire trend, as suddenly the EUR/USD pair appears to be on its back foot. If we can break down through this support level, the move lower could be rather rapid, and we could see a continuation of this move over the next several weeks. Alternately, if this area holds, then I anticipate that we go back into the recent consolidation range.