EUR/USD 1H chart 6/18/2013 6:55AM EDT
(click to enlarge)
Triangle: In the previous update, I noted the market shifting EUR/USD from a rising channel to a triangle, which was symmetrical (higher lows, lower highs). There was a break above this triangle late US session, but price held under the 1.3389 high. Support however continues to be higher, turning the symmetrical triangle into an ascending one, which has more bullish bias.
Breakout: The market is cracking the resistance around 1.3390 but clearing above 1.34 would probably be needed to open up the 1.35 handle, which is about 78.6% retracement of the 2013 downswing.
FOMC: The key event risk the market will be monitoring for USD-crosses is the FOMC policy decision due for Wednesday. The key word is tapering – whether the Fed is ready to wind down its $85 bln/month asset purchase aka. quantitative easing. The US should gain on tapering talk, and should loss if there is no indication of its timing. There will be a press conference after the decision statement, where Bernanke will answer questions, and try his best to keep market volatility down by being vague about tapering. We’ll see how the market interprets his communication.
Scenarios: The 1.35 level is achievable if tapering if the market believes tapering is still far from sight. A break below 1.3275 would form a top, and would likely be accompanied with more information on a tapering timeline.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.