The EURUSD has started to settle in after weeks of extreme volatility.
We caught a few of those moves, including the false break above the upper boundary of a descending channel from 2019.
Sellers even managed to close the April 2017 gap at the end of that move.
However, since April 6th, the EURUSD has been relatively docile.
It seems to me that the euro is setting up for the next big move against the US dollar.
The million-dollar question is, which way will it break?
If you saw Saturday’s forecast video, you know the EURUSD is nearing the end of a multi-year terminal pattern.
The lower level extends from the 2000 lows while the upper boundary starts at the 2008 high.
Here it is on the monthly time frame:
This is arguably the most significant pattern the euro has faced since its inception.
That’s a bold claim, but it isn’t unfounded.
Whenever you’re dealing with a wedge pattern like the one above, the most conservative targets ends up being the high or low of the structure.
In the case of the EURUSD, that suggests a move to either 0.8300 or 1.6000.
That’s 2,700 pips below or 5,000 pips above today’s price.
Of course, any move of that significance will take months to play out.
I’ll let you decide which way you think the EURUSD will break, but my gut tells me it will be lower.
We’ve already seen the NZDUSD break below a similar multi-year wedge.
And while the EURUSD and NZDUSD don’t exhibit much of a correlation at the moment, they do share the US dollar.
This does not mean I think the euro will move lower immediately.
It all comes down to the technicals and that 1.0700 area.
That’s the linchpin keeping the EURUSD afloat.
Until that 1.0700 area breaks down, it will continue to serve as support.
Furthermore, given the magnitude of this wedge pattern, it may be another few weeks or even months before the euro breaks out.
But given the thousands of pips that lie in either direction, traders won’t want to ignore what could be the most pivotal chart pattern in the history of the euro.
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