Want more price action setups? Join our Exclusive Member’s Community
The markets have been fairly uneventful to start the week, at least in terms of any favorable price action that we can trade. However between this triangle pattern in EURUSD and FOMC scheduled for tomorrow, that might be about to change.
After falling 3,500 pips since May of last year, the pair was able to mount a rally in mid March that quickly ran into resistance at 1.1035. This level has now rejected the pair on three separate occasions, which forms the top of the triangle pattern in question.
At the time of this writing, the pair is testing what might become the lower level of the triangle. I say might because I would like to see this level hold one more time before a possible break to the downside. This would give me confidence that other traders are seeing the same pattern.
For the record, I’m not interested in trading the EURUSD so long as we are trading within this triangle. Instead I would prefer to play this as a wedge breakout but only once the market confirms a break of support or resistance and produces confirming price action. This is extremely important especially given tomorrow’s scheduled news event.
If we do get a downside break, key levels to keep an eye on are 1.0640 and 1.0470. A break above 1.1035 would negate any short-term bearish bias and could trigger a move to 1.1260.
Note: FOMC is scheduled for tomorrow at 2pm EST, so be sure to take this into consideration when planning your trades.
Summary: Wait for a 4 hour close below trend line support and then watch for bearish price action on a retest as new resistance. Key support comes in at 1.0640 and 1.0470. Alternatively, a 4 hour close above 1.1035 would have us looking for bullish price action on a retest as new support and could trigger a move to 1.1260.