- EUR/USD's upside intact while above a month old trend-line
EUR/USD is trading around 1.21, but close to the weekly lows. The ECB is set to expand its bond-buying scheme in its last meeting of the year and potentially comment on the euro exchange rate. Brexit and US stimulus impasse are weighing on market sentiment.
EUR/USD is wavering around 1.2080 during early Thursday. The pair has been trading in a range of consolidation between 1.2177 ( 32-month highs) and 1.2060. However, EUR/USD it is still holding above a month old ascending trend-line.
Overall , a formation bullish flag pattern is seen and explosive moves are often associated with the bull flag. A brief pause in the trend for the past 5 trading days following a strong price move higher on 3rd December. Meanwhile, note that the currency pair could gain support from ascending trend-line which coincides with 50&% retracement for a possible upside.
These are the key things to note:
- A bullish flag pattern has to be preceded by a strong uptrend move that resembles a flagpole, characterized by the continuation of the upward trend.
- Form a shallow retracement (typically less than 50% of the flagpole).
As a result, the strong RSI conditions, not overbought, favor the pair buyers to stop the previous four days' downtrend.
However, a clear break above the 1.2140 resistance threshold on the 4-hour chart will be needed for the EUR/USD bulls to challenge the monthly top near 1.2180. If at all the quote remains positive beyond 1.2180, next 1.2205/15, will be important to watch.
Meanwhile, a downside break below ascending trend-line will likely is to pressure EUR/USD to target the weekly low at 1.1925
