EUR/USD Completing a Triangle Price Bottom

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EUR/USD Completing a Triangle Price Bottom

EUR/USD in a Triangle

EUR/USD was bearish at the beginning of the week, carrying over downside momentum from last week, after the ECB cut rates and put more stimulus on the table. This week, EUR/USD found support at 1.2860 and has been trading in a symmetrical triangle as we can see in the 1H chart.

EUR/USD 1H Chart 9/12
eurusd 1h chart 9/12

(click to enlarge)

As we get into the 9/12 Friday US session, we are seeing EUR/SUD spring up from the Asian-European session lull as it tries to break above the triangle resistance, and put in a price bottom.

US Retail Sales

The rally corresponded with the release of US retails sales data for August. Sales grew 0.6% in August, which is an improvement on the 0.3% growth in July (this was upwardly revised from 0.0%). Forecasts called for a reading around 0.3%. Core retail sales, which excludes automobiles, came in at 0.3%, which was the same as the July’s reading, which was upwardly revised from 0.1% to 0.3%. This was pretty much in-line with forecasts around a 0.2% print.

This adds to the slate of US data that continues to support the USD because they support the prospect of an earlier rate hike than the average projection of mid-2015. However, the fact that USD did faded after the release suggests that in the medium-term, the USD might be overbought and is ready for a correction, at least in the short-term.

EUR/USD at Triangle Resistance


Bullish Correction Scenario: A
 break above 1.30 puts the 1.3110 level – previous support pivot – in sight.

If price breaks below 1.2915, it would have cleared below the SMAs in the 1H chart, and break below the triangle. In this scenario, we are looking at a bearish continuation first with the 1.2860 low, then the 1.28 handle in sight.

EUR/USD 4H Chart 9/12
eurusd 4H chart 9/12

(click to enlarge)

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.