$XEU has built out a small SHS pattern on the 2 Hr chart. If the pattern is valid (seems so) it has a Price Objective (PO) target of 119.6. Of course that means the rectangle consolidation is also broken to the down side. The new target is less the height of the rectangle – so 118.6 – depending on where the rectangle is broken to the down side. This also assumes the $XEU pattern is in fact a rectangle. The bottom rail may need to be re-positioned. Sounds complicated. Its not really.

$USD has broken out from a 5 point reversal pattern. The 3 month base should give $USD enough jam to at least reach its PO at the extended neck line of the SHS pattern above – 92.6. Using Red Label’s formula we calculate the probable gold price at that level – $1297. In the event short covering drives the dollar even higher, a second blue sky PO is noted.