Over the last several weeks, the EURO USD has been meandering at the top of a Major Resistance point, forming a fairly large range on the Daily Chart. This area of uncertainty coincides with the Resistance of the Weekly/Monthly Chart´s large Pennant that was formed in the aftermath of the risk-aversion buying of the USD during the Financial Crisis. The crossroads is completed by an uptrend line (in blue) that has defined the direction of the currency since July 2013.


DAILY CHART


With consolidation ranges such as these, we can either trade within them gathering pips in either direction or wait until there is clarity in the form of a breakout. If we were to see a bearish breakout in favour of the USD, this could take it to 1,3270 below the uptrend line as it starts a new downtrend. In breaking short, it would be completing the Right Tip of a Bear Crown setup with the Left and Centre Tips already formed. On the other hand, a bullish breakout would carry us to 1,4052 in a few weeks and would be significant given that it would be also breakout from the much larger Monthly Pennant.


DAILY CHART - BREAKOUTS LONG & SHORT

The economic factors that could decide the direction of the breakout include the FOMC Minutes to b e released next week, Janet Yellen´s second testimony, German and European Economic Sentiments, PMI for Germany and the US as well as housing data for the US. In the meantime, shorting at Resistance and buying at Support inside this range are your trades until the breakout begins.
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