Daily Forex Technicals |
Written by FXTimes |
Mar 06 13 13:30 GMT
EUR/USD Remains in a Flag Pattern Ahead of the ECB Meeting
Flag pattern: The EUR/USD has found itself in a flag pattern again this week. It was in a similar consolidation pattern that formed between 2/25 to 2/28 before falling below 1.30. The current flag pattern has been developing from 3/1 to 3/6. The EUR/USD is now at the crossroad as the flag pattern comes up against a falling trendline that connects the 2/10 high with the 2/25 high.
ECB Meeting, Breakout: There is an ECB interest rate policy meeting on Thursday followed by a press conference with bank president Mario Draghi. The market might be squaring up in consolidation mode in case of any surprises. Looking at the 4H chart, we see that price will likely anchor out of the flag pattern or the falling trendline from 2/10 even before the ECB meeting. Be wary of initial breaks of trendlines that have no volatility. The risk event should introduce some increased volatility over the next couple of sessions.
Above 1.3075, EUR/USD breaks above the falling trendline from 2/10, putting pressure on the previous swing pivot at 1.3161. A rally above this high is needed to neutralize the bearish outlook. Then an upwards break of the falling trendline that goes back to the 1.3710 high of 2/1 would introduce the bullish outlook.
A break to the downside, below 1.30, is going to put pressure on the 1.2965 low, and signals bearish continuation with 1.2875-1.2885 in sight, as noted in the previous EUR/USD update.
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