Triangle Consolidation: The 1H EUR/USD chart shows that it has been consolidating since last week after it found support at 1.3333. Then it found resistance at 1.3432. This week, price has been contained in this range, and ended up coiling, forming a triangle pattern.
Bullish Momentum: Within this triangle formation, there is near-term bullish momentum developing. The 1H RSI popped up above 70, and after it came back down and has been holding above 40 since. That shows building bullish momentum in this time-frame.
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Bullish breakout: As we get into the 8/15 US session, price is pushing up towards the triangle resistance. If price breaks above 1.3410, it will clear above the triangle and the 8/14 high. This should first open up the 1.3432 high from last Friday.
Central pivot: If there is a pullback after the break above 1.3410, we should monitor the “central pivot” of the triangle as possible support. This is in the 1.3375-80 area. A hold above this area would signal further consolidation, or bullish correction because it would respect the triangle pattern as a price bottom.
Bullish scenario: In the bullish correction scenario, the 1.3432 high from Friday, and the 1.3444 August high will be short-term resistance where we should find sellers. Once again, if price can hold above the triangle’s central pivot area, the pressure will remain on these highs. Note that around 1.3445, price will likely be testing a falling trendline seen in the daily chart. A break above would confirm a consolidation, bullish correction mode for EUR/USD. We will have to see at least a break above 1.35 to consider any bullish outlook outside of the very short-term.
A break above 1.3445 would then open up the 1.3475-1.35 area (previous 2014-high and June consolidation lows), which very likely will provide resistance.
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Bearish Continuation: However, at any point, if price breaks back below 1.3775, the focus remains to the downside, and the prospect of a bullish correction dwindles. First the focus will be toward the 1.3333 low. A break below that opens up the 1.3295-1.33 Nov. 2013 lows.
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