EUR/USD Awaiting Breakout from a Symmetric Triangle

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EUR/USD Awaiting Breakout from Symmetric Triangle

This week, EUR/USD fell to about 1.2860 before finding support. The 1H chart shows that there is a symmetric triangle forming, and price is testing the triangle resistance. Price has also broken above the 100-, and 50-hour simple moving averages (SMA), and pushed the 1H RSI above 60, showing a loss of bearish momentum in this time-frame.

The EUR/USD is essentially attempt to form a price bottom. We can also argue that there is an inverted head and shoulders pattern forming. A break above 1.2950 would clear the triangle resistance, and the tilted neckline. But we might still wan to see a break above 1.2990 before considering a bullish correction scenario.

EUR/USD 1H Chart 9/11
eurusd 1h chart 9/11

(click to enlarge)

Now if there is a break above 1.2990, a consolidation breakout projection would take the width of the range which is 127 pips, and put it above the 1.2988 high, which would target the 1.3115 level.

Looking at the 4H chart, we see that we should expect some resistance at the 1.30 handle, which is reinforced by the 100-period SMA in the 4H chart, up to the 1.3110 support pivot.

EUR/USD 4H Chart 9/11
eurusd 4h chart 9/11

(click to enlarge)

Now, if price turns down at 1.30, we might not get this bullish correction, especially if that helps the 4H RSI hold below 60. In this scenario, we should first see if the bearish trend is back in play by monitoring the broken consolidation range. There is a central pivot in the 1.2910-1.29120 area. If price can hold above the 1.2925 level, which is where the 100-, and 50-hour SMAs reside, then bullish correction scenario is likely. A break below 1.2910 however, will likely keep the correction scenario at bay. After all, the trend is still sharply bearish, and there is room to fall until the 1.28 handle, which is just above the 2013 lows that provided support from March through July.

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