EUR/USD in a Triangle Breakout to the Upside

Forex Technical Update

Previous: EUR/USD Pops Up Above 1.35 to Test Declining Channel Resistance (11/30)


Since the 11/30 risk-on pop, EUR/USD has been held mostly below 1.35 as it consolidated in what appears to be a triangle seen in the 1H chart. The market is showing some strength as it gears up for the US session, where the Non-Farm Payroll report comes out at 8:30 AM EST. From a weak 80K in October, the November forecast is 126K, not a great number, but an improvement. 200K and above could be a pleasant surprise and push for more risk-on trading.

As I report the triangle, EUR/USD has just broken above the resistance, and is cracking this week's high near 1.3530. The 4H chart shows that the next resistance in the very short-term can be 1.36, 38.2% retracement, reinforced by a pivot seen on 11/18 as a consolidation high, and 11/1 as a consolidation low. Then if a throwback fails to break the 1.35-1.3530 area, we have further confirmation of the channel breakout seen in the 4H chart. and further upside - first to the 200SMA which is at 1.3650, and then to 50% retracement at 1.3730 - is in the scope.

If the market gets to 1.36, then falls back below 1.35, we could have exhausted a corrective rally. The bearish outlook opens up further with a clear break below 1.34, and preferably with a pullback that establishes 1.34 as resistance. In this scenario, we can anticipate a sharp bearish continuation first toward 1.3270 pivot, and then the 1.32-1.3211 low from last week. Below that, we first open up October low at 1.3145, then 1.3045, and a swing projection to 1.2830. (Refer to previous article on downside targets.)

 Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources