EUR/USD Weekly Technical Outlook - Euro Coiling Price Action is a Good Thing
EUR/USD Technical Highlights:
- Euro price action continues to contract
- Waiting for one side of triangle/wedge to give-way
- 11500-line extremely important
Choppy, contracting price action (wedge/triangle building) can put a trader’s patience to the test, but instead of frustration, as we discussed in Friday’s webinar, this type of activity should lead to building excitement. The choppier it gets the closer we are to making a material move. The chart pattern currently under construction is coming around nicely with price moving towards the apex.
Symmetrical triangle or descending wedge? Does it matter? Not really. As it stands now it is taking on the shape of a symmetrical triangle, but should we see a break of the 7/19 low (11575), we will likely be looking at a run on the 11500-level. With another hold of this key level, the symmetrical triangle could shape-shift into a descending wedge.
At the end of the day, 11500 is where our biggest focus is – stay above, then more chop and potential for a rally on a top-side triangle breakout; but break below, and selling could quickly turn aggressive as the trend from earlier in the year continues to mature.
Overall, the days ahead may hold more of the same uninspiring price action. If you are fading levels for scalps, then there is support and resistance to play off. For those looking for a breakout, patience will likely serve you well. Remember – no position is a position. Keeping your powder dry is part of the game.
Heads up: This week holds a few key data releases and events: There is German unemployment and Euro-zone inflation data on Tuesday, FOMC on Wednesday, and on Friday the release of U.S. jobs data for July. For details, check out the economic calendar.
Gotten a little off track? It’s happens. Check out these 4 ideas to help rebuild your confidence.
EUR/USD Daily Chart
EUR/USD 4-hr Chart
As per IGCS, traders are building a long position again, but in a choppy trading environment it is difficult to glean any meaningful information from this activity. However, should we see one side or the other start to gain momentum, watch for any sharp shifts in sentiment. For more details on IGCS and how it can work as a contrarian indicator, check out the IG Client Sentimentpage.
EUR/USD IG Client Sentiment
Resources for Forex Traders
Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.