EUR/USD Falls Into Tight Trading Range Pattern
James Chen January 24, 2013 5:00 PM
<p>EUR/USD (daily chart) as of January 24, 2013 has fallen into a tight trading range pattern that closely resembles a pennant formation. The trading week […]</p>
EUR/USD (daily chart) as of January 24, 2013 has fallen into a tight trading range pattern that closely resembles a pennant formation. The trading week thus far has been characterised by market indecisiveness and especially low volatility in this currency pair, as can be noted by the recent succession of daily spinning top and doji candle patterns.
The current pennant formation, which can be considered a potential bullish continuation pattern as it has surfaced within a bullish trend, occurs after price made a breakout above 1.3300 two weeks ago and then went on to establish a 10-month high right around 1.3400. Since then, price has fluctuated around the 1.3300 region and progressively tightened its consolidation.
In the event that the pennant pattern succeeds as a trend continuation formation with a breakout to the upside, price could move towards further potential resistance around 1.3500 and then 1.3700. If the pennant fails with a break of the consolidation to the downside, price could make yet another correction towards key potential support around 1.3000.