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EURUSD Triangle breakout to rally?


Mercury

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  • 2 weeks later...

Looking at Euro dollar, although this without doubt has irritated both euro bulls and bears, looking at this chart it does appear the maturity of the trend is becoming more evidently obvious. Looking at the chart below its becoming obvious that bears are slowly making less progress. With upcoming payrolls next friday, we could see this pair have indeed a deeper retracement, possibly with indeed the Trump event being a W2 perform a possible zigzag upwards. This therefore could be limited to the blue, now resistance decending trend line drawn below.



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I see your Triangle  and it may have some validity but there aren't enough touches on it for me.  I have something similar on my 4 Hourly and critically a Weekly chart large scale Triangle formation where price is finding resistance just now.  A break below the Mar 2016 lows signals a sustained bearish in a wave 3 of 5 BUT a rally off the lower Triangle line brings up 3 possible rally scenarios as marked:

 

  1. the first is a small retrace as part of the bearish move previously mentioned
  2. the second is a A-E coiling Triangle formation a rejection of the upper triangle line being the harbinger of a sharp bearish move
  3. the third being a classic complex wave 4 retrace after which a classic wave 5 would ensue

In the shorter term the 4 hourly chart suggest a Triangle has already been broken BUT there is near term resistance over head, which could send price back down in a classic 1-2 retrace before a strong move up.  A significant break through the resistance would suggest a stronger move up to a wave A.

 

One would like to see a corresponding situation on DX as the Euro is the largest component of the DX basket.  The DX daily chart does suggest a potential retrace period, current a wave 1-2 retrace pattern is most likely but this could change as the market movement progresses and the EURUSD scenarios play out.

 

In summary then, looking at EURUSD, a breakout out rally suggest several scenarios prior to a resumption of the bear move but a break below the March low is decidedly bearish.  My bias is for the former at present but let's see...

 



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