The euro fell through the lower trend line of the upward-sloping channel two days ago. This is significant since the lower trend line extends all the way back to the July 2012 low which was created when Draghi pledged to support the euro by all means necessary. Draghi's promise lasted about seven months. The euro is jumping higher this morning, now at 1.3271, which is sending the S&P futures higher. Higher euro = higher markets. Lower euro = lower markets. China PMI is far lower than expected but the markets continue to ignore bad news. Looking at the indicators (thin red lines), the chart is very weak so the pop today would be viewed as a dead-cat bounce at this juncture. The euro may want to back test the lower trend line since it is such an important trend line.
There are three head and shoulders patterns on the chart. The pink H&S is head at 1.365, neckline at 1.335, target 1.305. The green H&S is head at 1.365, neckline at 1.325, target 1.285. The blue H&S is head at 1.365, neckline at 1.300, target 1.235. Thus, choose your poison. The euro uses the 20-week MA at 1.3121 as support so watch this number moving forward. Projection is for the downward move to continue after the dead-cat bounce plays out early this week. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added 2/25/13 at 5:00 PM: A wild market day occurs with a dramatic bounce in the euro up to over 1.33 then collapse to close at 1.3069. This nails the target for the pink H&S described and highlighted above.