EUR/USD Weekly Technical Outlook: Euro Price Coiling Up, ECB Nearing

April 21, 2018

EUR/USD Weekly Technical Outlook: Euro Price Coiling Up, ECB Nearing

EUR/USD TECHNICAL HIGHLIGHTS:

EUR/USD price action converging into a triangle
ECB on Thursday, but not expected to be a big market mover, never know, though
A breakout one way or another should be upon us relatively soon

The EUR/USD range is certainly testing traders’ patience, but those who remain disciplined and keep their powder dry are likely to be presented with a momentum-move relatively soon. Ranges don’t last forever. This is one of the tightest in the euro’s existence and getting tighter as price is wedging up into a triangle. A resolution is closing in.

This coming week we have the ECB on Thursday, but there isn’t any grand expectation for it to be a market-moving event. However, as per usual, expect the unexpected; you never know what the last grain of sand will be to collapse the pile (in this case, a breakout in either direction). Regardless of what the catalyst is – big, small, expected, unexpected, of the technical variety – when the range/wedge is finally broken a sizable move should begin.

On Friday, the euro thoroughly tested the bottom of the triangle, making a turnaround needed immediately this coming week to keep the pattern intact. Amid the testing of the bottom of the triangle was a slight breach of the April trend-line, but helping keeping the euro supported is a slope extending over from May of last year.

This makes the relative confluence of levels & lines important, as should they one-by-one begin breaking – 12215, 12155, then finally the 2017 high at 12092 – momentum should start to pick up. On the topside, the big threshold is the 2008 trend-line followed by the January high at 12556.

In either event, the move should be relatively large, with the size of the pattern pointing to about a 400-pip drive higher or lower upon a breakout. It’s always possible we see a fake-out breakout followed by a reversal in the opposite direction, but we’ll first run with what is presented to us and adjust accordingly, if need be.