EURUSD Continuation Pattern Emerges

by Justin Bennett  · 

August 2, 2018

by Justin Bennett  · 

August 2, 2018

by Justin Bennett  · 

August 2, 2018

Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

Click here to get access to the same charts I use.

The EURUSD consolidation may finally be coming to an end. Since late May, the single currency has struggled to break free from a 300 pip range after falling 900 pips between April 19th and May 29th.

More recently, the pair has been unable to garner enough demand above 1.1730 to reverse the short-term downtrend.

On the other side of the range, the floor just above 1.1500 has held as support on two separate occasions starting with the May 29th low.

The sideways movement has also narrowed in the last five weeks. A view of the daily time frame shows what appears to be a narrowing wedge. Resistance extends from the June 14th high while support begins with the June 21st low.

So far today we can see how the pair has caught a slight bid at 1.1600. That’s right where wedge support comes into play which suggests the market is taking note of this lower level.

However, it’s going to take a close below it to expose the range floor at 1.1500. You could attempt trading a 4-hour close below the level, just know that the daily close (New York 5 pm EST) tends to be more reliable.

Alternatively, a close above wedge resistance near 1.1700 would send the pair higher. Given the recent downtrend, though, I have to favor a break lower. I even stated that this sideways movement looks like a continuation pattern in Sunday’s forecast.

This could very well be the pattern that allows the pair to run free. If we do get a break lower, the 340 pip height of the wedge suggests the Euro may not encounter much demand until just below the 1.1300 handle.

All in all, I remain bearish the EURUSD but won’t consider an entry until sellers can clear wedge support near 1.1600.

EURUSD wedge pattern daily time frame

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  1. There should be a close below 1.1600 today or tomorrow… I see much of dollar strength coming fully next week.

  2. Appreciate the analysis, Justin. I can see the price action pattern that you are explaining, and why it is a continuation pattern, and why you would highlight it now (but won’t necessarily trade now).
    One question… If there is a clean break to the downside (ie NY close is lower than the wedge support line per the chart above), and you were to put a sell trade on, where would your stop loss be for that trade? Would it be slightly above the support line of the wedge (ie the lower line)? Would it be at or above the upper line (ie resistance within the wedge)? Or somewhere else?
    Thanks in advance.

    1. I’ve written about stop loss placement before, but I’m sure we’ll discuss these details in the member’s area.

  3. Thanks a lot Justin. will it be safe tomorrow to short EURUSD ifever it closes below 1.1600 in light of the NFP news tomorrow?

    1. Joel, nobody knows what the next hour brings much less the next day. You should turn to your own set of rules in situations like this. If you don’t have rules, you should work on developing some.

  4. Thanks for the insight. However, we have NFP tomorrow. It advisable to go short if we did the desired close below the level pointed out a head o DC the NFP.

  5. justin you are simply the best im subscribed for all your free info and analysing charts and sharing with us just your free stuff alone is helping me so much and ive always wanted to get on board with your team members and hopefully soon enough il get on board just getting back on my feet with good pay in new job so hopefully in couple of week il be joining and thanks so much for your honest work you inspire all us god bless

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