After the announcement of the Federal Reserve last week Wednesday the euro jumped up, which made some people ask themselves whether the worst is already behind us for the European currency. We found a chart, meanwhile, that could mean the opposite.
Oversold conditions for the currency paved the way for the euro to bounce back up last week Wednesday, according to Rick Ross from Evercore ISI. Ross added that the euro could reach the 1.12 dollar level in the coming weeks, although he feels that ultimately the currency will go down.
Ross stated that the euro broke a technical pattern, which could cause more trouble. He pointed out specifically that the euro dropped below the ‘neckline’ of the long-term head and shoulders pattern. This is a often seen by technical analysts as a sign to sell. Whichever way you look at it, the breakout is bad news in the eyes of Ross.
Ross feels that the euro, because of the considerable technical breakout to the downside, will probably test new all-time lows of 80 cents per euro. The euro will not crash, in his opinion, but rather lose value over time. The overall message here is clear: there is plenty of downside left for the euro potentially.
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