Does this count as a triangle breakdown? EUR/USD gapped lower at the start of this week, as forex traders reacted to the outcome of the Greek debt talks over the weekend. The pair is currently trading below the ascending triangle on the 4-hour time frame, suggesting that further losses are in the cards. Note that the chart formation is approximately a thousand pips tall, which means that the resulting selloff could last by the same number of pips. Stochastic is pointing down anyway, confirming that euro sellers are in control of price action. However, if euro bulls try to fill the gap, the pair might wind up trading inside the triangle pattern once more.
For those looking for a simple trend play, this rising trend line setup on EUR/NZD’s 4-hour forex chart is still lookin’ pretty good. The pair is sitting right on the trend line and the 100 SMA support at the moment, trying to make up its mind whether to make a bounce or a break. A bounce could take price up to its previous highs near the 1.6600 major psychological level and beyond while a trend line break could mark the start of a downtrend. Stochastic seems to be favoring the latter scenario since the oscillator is moving down from the overbought zone. Meanwhile, the moving averages are hinting that the uptrend could stay intact since the short-term SMA is above the longer-term 200 SMA.
Here’s another breakdown that just took place for a euro pair! EUR/GBP also gapped down over the weekend and is trading below the long-term range support at the .7100 major psychological level. This area has held as a floor for the past few years, and the recent breakdown now has the pair trading at levels not seen since 2007! Price could head lower by an additional 400 pips, which is roughly the same height as the rectangle chart pattern. Stochastic is still pointing down, confirming that sellers are on top of their game, but a pullback to the broken range support might still be possible.
Forex Chart Settings:
To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.