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EUR/USD Descending Triangle Broken

June 6, 2010

EUR/USD has managed to form a descending triangle pattern during last 2 weeks and break out of it last Friday. The chart pattern was formed on the daily chart and is quite small (relatively to the breakout depth). The pattern should be quite strong as its bottom line was also a long-term end of the bearish trend lasting from November 26, 2009. The breakout happened near the apex of the triangle. The conservative target (derived from sentimental analysis rather than technical) is located near 1.1800 (green line) — the level of euro’s inception in 1999. This level is a probable next target but, since the price has fallen significantly below the lower limit of the triangle, the risk/reward ratio can be unsatisfying. The next target is the technical target of the descending triangle — 1.1515 (blue line), which can potentially yield a lot of profit with a nice risk/reward ratio:

EUR/USD, Descending Triangle on D1, June 5, 2010

By the way, I expect a positive weekend gap on EUR/USD tomorrow, so I’d recommend opening a short position from it, especially if it’s high enough.

If you have any questions or comments regarding this EUR/USD chart pattern, please, feel free to reply via the form below.

3 Responses to “EUR/USD Descending Triangle Broken”

  1. ZAINAB

    I thank you for the rich analysis of euro/dollar,
    just a question, what do you think about the short term signal, is there any correction for the pair before it continues descending?

    Reply

    Andrei Reply:

    I think it may open with a positive gap or even go up a bit after opening but I am 80% sure EUR/USD will go down at least to 1.18 before a serious correction is possible.

    Reply

  2. Andrei

    The gap didn’t appear but I wouldn’t recommend entering at the current level with the 1.18 level as a target – too low reward/risk ratio. Enter now only if you are sure that EUR/USD is going to 1.15 and below. In other cases wait for a retracement.

    Reply

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