EUR/USD Trading in a Tight Consolidation

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EUR/USD Trading in a Tight Consolidation

The EUR/USD is coiling and waiting for a breakout. Let’s take a look at the charts to assess the potential breakout.

The 4H chart shows the market pulling back to 1.1423 after marking a new low on the year around 1.11. Then, price started to coil. We can see the bearish bias and bearish momentum being preserved so far, so the preference is a breakout to the downside. A break below 1.1260 opens up the 1.11 area, with risk of breaking towards the 1.10 handle.

A break above 1.1423 however puts EUR/USD above last week’s resistance pivot and above a falling speedline from December. This would open up only a short-term bullish outlook within a medium-term bearish one that would still be intact. In this scenario, look for resistance in the 1.15-1.1550 area.

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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.