EURUSD continues to trade stuck in the 150 pips range. Although the pair did break out of it intraday there is yet to be a close outside the well-defined range.
One thing, different from last week that we can note is the falling trendline (dotted blue line) that may give some early clues on the direction in which the pair will break out. If the falling trendline holds a downside breakout will be more probable while if the market breaks it and closes above it then it’s more likely it will continue to move up outside of the range.
EURUSD Daily chart – Completely stuck!
Ongoing weird looking price action on the 4h chart. A broadening wedge has formed here, and while it is generally an ending pattern when it appears in a trend, in this situation there is no preceding trend. So, in some instances, a broadening wedge can be considered a starting pattern of a new trend.
What it will turn out to be is hard to tell at the moment and we can not confirm the direction until we get a close outside of the range on the daily timeframe.
The RSI continues to pick tops and bottoms beautifully.
EURUSD 4h chart – Broadening wedge formation
The earliest clue for the future direction of EURUSD will probably be shown on the 1-hour timeframe on the breakout of this descending channel. Since the price action is currently close to the upper border of the channel traders need to pay particular attention to how the pair will trade around it (1.1185 – 1.12 area).
In this regard, trading off it is also acceptable. For example, if the price goes up to the upper trendline but reverses again selling that reversal will be a good trade with a tight stop and good reward potential to the downside which would be the lower border of the channel towards 1.11 – 1.1090.
EURUSD 1h chart – Watch the upper border of the channel
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