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EUR/USD squeezed in a triangle – which direction will it

Since jumping to higher ground on Bernanke’s dovish words, EUR/USD has established itself in a triangle.  On the topside, it is capped by a moderate uptrend resistance line. The pair is unable to sit above 1.32. On the downside, there is a clear steep uptrend resistance line that follows the pair since it made a correction to just under 1.30.

The lines meet on July 29th, but the pair might make a breakout beforehand – before the end of the week, but to which direction? Here is how it looks on the charts:

Update: the pair is now attempting to break above the moderate uptrend resistance line, and the pair trades at 1.3222 after already touching 1.3230.

EUR USD Triangle July 23 2013 technical analysis for currency trading foreign exchange

On one hand, QE tapering might already priced in, so the dollar has limited scope for rises. We have seen the greenback weakening against many currencies, with GBP and CAD making the most of it.

On the other hand, the euro-zone isn’t doing so well (as issues from Portugal, Greece and Spain show), and this limits the euro’s gains. All in all, the pair is stuck between the fundamentals and squeezed within the triangle.

European PMIs could provide a clue and so could the US new home sales. Further resistance appears at 1.3255 and 1.3350. Support is at 1.3175, with much more meaningful support at 1.31.

For more levels, see the EURUSD forecast.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.