This looks to us like a toss-your-shorts signal in the euro. It might even be worth an exploratory long side trade — but not a large one. The stop is pretty obvious too –about 2% under the low of the little island there.
Now it pays to remember that the big banks and the big players in the currencies like to flush out the market before taking it in the direction they want it to go. So this could be just that before taking the market down more. Another way to look at it is that August has been essentially the natural downwave resulting from the upwave started in June.
Whatever it is (and we think it’s a buy signal) this kind of action demands attention.
And we would bet on the long side here.