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While I’m still emotionally recovering from my USD/CHF trade, I figured I should share with you guys another setup that I’m watching these days.

I’m talking about EUR/USD’s 4-hour chart! As you can see, the pair is confined in what looks like a symmetrical triangle on the 4-hour chart after riding a downtrend from way back in late June.

While it’s tempting to call it a pennant that would likely lead to trend continuation, I also have to remember that symmetrical triangles like this still imply indecision. That means EUR/USD could still break higher!

EUR/USD 4-Hour Forex Chart
EUR/USD 4-Hour Forex Chart

I have to admit, I’m looking for a downside breakout on this one.

For one thing, the ECB looks like it’s just getting started with its new round of stimulus. Fed members, on the other hand, are reluctant to cut their rates further this year.

The euro zone area also has a few potential bumps on the horizon including worsening economic data, uncertainty over Lagarde’s policies as ECB head honcho, a hard Brexit, and Trump possibly turning his tariff spotlight on the economic group.

Meanwhile, U.S. and China’s trade reps are due to meet in early October. Positive trade-related headlines and relatively okay economic data could push the dollar higher against the euro in the next few days.

What do you think? Will EUR/USD extend its downtrend? Or are we looking at a potential reversal here?

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