The influx of headlines regarding the debt crisis and the European summit yields choppy trading but also generates nice patterns. EUR/USD reached a downtrend resistance line for the fourth time already and is now attempting to break above it. There is a tough resistance line at the same point.
In addition, a clear floor is seen below: a double bottom. Is it set to break higher or lower? Update.
As seen on the chart, downtrend support was formed at the beginning of the week with the peak above 1.39 and later with a surge higher.
Another move on Thursday was only a few pips shy of this line and so was another attempt today, which was even closer. The line is at around 1.3828 at the time of writing.
On the downside, 1.3650 is a clear floor. It has been tested twice during the week. EUR/USD didn’t just swing and jump back but rather “sat” on this line for some time.
France and Germany are still discussing possible comprehensive solutions for the debt crisis. This includes the ways to utilize the EFSF (bailout fund), the size of the Greek haircut and the way that banks will be recapitalized. A summit is due on Sunday with another one probably on Wednesday.
For more on the euro, see the EUR/USD forecast.
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