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EUR/USD Forecast 25 Feb 2016

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EUR/USD Forecast 25 Feb 2016
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Possible head and shoulders pattern

Insisting on the long side on the EURUSD pair so call options from the current 1.1020 area as the bounce from the lower levels seems to form a bullish pattern, namely an inversed head and shoulders.

While the measured move of this pattern is not that big, what matters the most is the fact that it is a reversal pattern and it means that more upside beyond the measured move is possible.

When it comes to a specific target, we would be cautious on the long side by the time the 1.1170 or 1.1200 area is going to be hit as the whole pattern is nothing but a possible triangle or a flat. In both cases, that area is a good one for put options with the same expiration date.

This end of week is going to be extremely important for the pair and not only because end of month flows for the month of February are starting to kick in and it means that spikes are most likely to happen.

From our point of view people is positioned extremely on the short side so a squeeze should come. It should be an impulsive move, but we do not know yet the extension nor the type of the move.

How to trade

What we do know is that the path of least resistance seems to be the upside and therefore an aggressive call option is recommended

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