The EUR/USD has consolidated in a triangle formation after a primary advance which began almost exactly one year ago. A downside breakout of the pattern is likely to spur selling of the EUR into the primary trendline support, currently at 1.3610 (will rise over time as the line is upward sloping).
The actual pattern has two primary targets below this primary support level. Yet, the uptrend line should be watched closely, as it confers with another likely resistance level at 1.3750 – the trendline and this support level will intersect mid-July. Until that intersection occurs the area between the trendline and 1.3750 is considered primary support.
Currently a downside breakout of the triangle will occur at 1.4110. This will change over time as the breakout line is upward sloping. A recent low is at 1.4073; waiting for penetration of that low is an alternative entry point and confirmation signal
There are three targets; the first as mentioned is the support area between the trendline and 1.3750. The next is 650 pips (rounded down from 700) from the breakout point. Currently this target would be 1.3460 (as the breakout price rises over time, so will this target), with the 50% retracement level (of the entire advance) not far below. The third target is 850 pips (rounded down from 900) from the breakout point. Currently this target would be 1.3260 (as the breakout price rises over time, so will this target).
Less likely at this point would be an upside breakout of the triangle. Currently this would occur at 1.4600, but will decrease over time. The upside breakout would also have three targets. The initial one being primary resistance between 1.4900 and 1.5150. This is a large area, so more concise targets will be provided in the event that the market threatens an upside break. Second target is 650 pips from the upside breakout point, with the third target being the breakout point + 850 pips.
Long-term trend remains up. Intermediate and short term trends are down.
Cheers,
Cory Mitchell, CMT
