Euro about to break support levels soon?

Guest post by Macro Story;

The EUR/USD is 1.5% away from testing a six year support level at approximately 1.31 which has only failed during the June 2010 Greek driven market selloff. This support level has been tested multiple times since being formed in 2005 (summer of 2008, March 2009, summer 0f 2010 and January 2011). Needless to say the next test could occur as early as this week.

Should this pattern fail next major support does not come in until 1.18 but a much bigger target may be possible based on a head and shoulders pattern at 85 which coincidentally is also the location of another major support level.

Those are big moves to be discussing here but considering the very real threat of sovereign defaults, global asset liquidations out of euro based debt and the risk of some form of euro debasement it is also a high probability. Such a move would put a major bid into the USD.

Nine Month Daily Chart - Interesting the EUR was due for a bounce and in the face of EU optimism that drove the ES it failed to close on the highs.

10 Year Monthly Chart - Head and shoulders pattern (right shoulder a little messy) has a target of .85 which coincides with a major bottom.