The strong bearish momentum seen in EUR/USD this week, has put the pair under risk of massive selloff as price is approaching a key support level, the neckline of a H&S figure around 1.2750. Considering the fact that the year low is at 1.2744, and therefore stops below should be large, a break lower should be the kick start of another round of dollar demand against the Euro.
The figure height is of around 950 pips, which means the target comes at 1.1800!! However, don’t get too excited about it: price did not manage yet to break lower, and to anticipate a 950 pips straight fall seems way too boldly. Besides if that actually happens, it will take at least a couple of months to achieve the target.
However, a daily close below 1.2740 should put traders on alert, and even close to panic, and the rally will likely accelerate towards its immediate target of 1.2660, November 2012 monthly low. FED Minutes next week and the possibility or not of tapering QE, will have the final word on the matter. Sustained losses below 1.2660, will expose then 1.2430/70 area, where the pair presents several monthly highs and lows since October 2008.
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