EURUSD Forex Forecast – Descending Triangle Still Intact!

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EURUSD Forex Forecast - Descending Triangle Still Intact!

EURUSD Forex Forecast - Descending Triangle Still Intact!

EURUSD bounced off the bottom of the descending triangle on its 4-hour time frame last week and is currently testing the resistance. It seems that the pattern could stay intact and that price is ready to make its way back towards support at the 1.0850 minor psychological level.

Stochastic is moving down from the overbought region, confirming that a selloff is possible. RSI is pointing down but hasn’t quite reached the overbought territory yet, which means that there may be some bullish momentum left.

The 100 SMA is moving below the longer-term 200 SMA, which appears to be holding as dynamic resistance for now. This is also close to the top of the triangle around the 1.1000 mark.

EURUSD Fundamental Factors

Greek government officials are set to pass a deal that could allow them to aim for a budget surplus and seal the deal on the third bailout. If this pushes through this week, EURUSD could make a break past the triangle resistance and go for more gains. The chart pattern is 600 pips tall so a break in either direction could see follow through of around the same amount as well.

As for the US dollar, the latest NFP report turned out to be a bit of disappointment, as it didn’t really increase the odds of a September rate hike. While the underlying trends suggest that tightening next month is still a possibility, most traders would rather wait for the August NFP to judge whether or not the liftoff will take place within the year.

Later today, US data on unit labor costs and non-farm productivity are lined up and improvements could remind traders that policymakers are just waiting to see stability in the jobs market before voting to hike rates. However, testimonies from Fed officials seem to be mixed yesterday, which means that there’s no clear bias for the central bank yet.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.