EUR/USD - A Descending Triangle Pattern Emerges

EUR/USD has been testing the patience of traders for the better part of 2-weeks now, chopping around in a 200 pip range between 1.3030 and 1.3230. Traders have been focused on EU headline after headline, primarily circled around the Greek debt saga - One moment they have 'reached a deal', and the next...nada! So, what does it all mean? Quite honestly, I'm a bit surprised the market has been as forgiving as it has, considering month in and month out Greece has failed to deliver on their promises - However, I believe a large part of the reason for this is the fact that nearly everyone who is bearish Euro is already short the darn thing. Consequently, the 'weak' shorts likely need to be either taken out (if already short), or scared from away entering (if they are thinking about it), before we can see a material EUR/USD move lower over the ensuing days/weeks.

Let's be real, anyone who actually thinks they 'know' which way this Greek deal is going to play out is fooling themselves…Moreover, most of the details have already been leaked out over the past few weeks, thus is this setting the market up for the ultimate 'buy the rumor, sell the fact' type of situation? I believe the potential for such a scenario looms large. So with the current fundamental situation in Europe unmistakably murky (at best), I believe this is the time when we need to lean more heavily on the technicals. So with that said, what do they advocate?

When looking at EUR/USD over the past few weeks, I believe I have identified a Descending Triangle Pattern - Typically, this is a bearish continuation pattern, but there are also instances when it forms towards the end of an advance higher (as could be the case currently) whereby the pattern would then acts as reversal configuration. Regardless of how a descending triangle forms, the series of lower highs indicates distribution and increased selling pressure, which ultimately gives this pattern its bearish bias. While this is one of the few setups that actually provides a bias one way or the other before it is actually complete, the potential trade based on this pattern is only valid upon break below the horizontal level of triangle support near 1.3025/30. Should this occur, then the measure move objective for such a break would target around 1.2820 - The height of the triangle, subtracted from the base of the pattern.

Please keep in mind that this is merely a technical pattern, and as such DOES NOT guarantee anything, however the analysis would suggest that it is more likely to be the case than not. Moreover, we cannot rule out another test of triangle resistance just below 1.32 the figure, before a potential correction follows suit