I’m seeing this neat reversal pattern on the short-term chart of EUR/USD. Will it break below the neckline in the next few hours?
The industrial production report is due from the eurozone during the London session and might provide some volatility for the pair.
Before we check out the setup, take a look at the top headlines that moved the major currencies during the Asian session:
- Australian Westpac consumer sentiment index down by 9.5% in Aug
- Australia’s wage price index up by 0.2% vs. 0.3% consensus in Q2
- Auckland returns to lockdown as fresh coronavirus cases reported
- RBNZ kept rates on hold at 0.25% as expected
- RBNZ expands bond-buying program and warns of negative rates
- RBNZ head Orr: NZD appreciation has dampened export gains
- Australia reports record COVID-19 daily deaths, cases rise
- Asian stocks take hits on uncertainty of U.S. stimulus plans
- Japanese preliminary machine tool orders down by 31.1% y/y
Upcoming Potential Catalysts on the Economic Calendar:
- U.K. monthly and quarterly GDP at 6:00 am GMT
- U.K. industrial production at 6:00 am GMT
- Eurozone industrial production at 9:00 am GMT
What to Watch: EUR/USD
This pair looks done with its climb as a double top formation can be seen on its 1-hour time frame. A break below the neckline around these current levels could confirm that a selloff would follow.
Can the eurozone industrial production report spur a breakdown? Or are we likely to see a bounce?
Analysts predict that industrial production in the region likely slowed from a 12.4% gain in May to just 10.1% in June. Weaker than expected results could trigger a support break and put EUR/USD on course for a 150-pip drop.Strong data, on the other hand, could allow euro bulls to defend the floor and take the pair back up to the highs near the 1.1900 mark.
Whichever direction you choose to play, don’t forget to take note of the average EUR/USD volatility in setting entries and exits!