EUR/USD Forming a Correction Channel Ahead of the ECB Meeting

by Admin

Awards 2013

EUR/USD 1H chart 8:20AM EDT 4/3/2013

EURUSD

Correction: The EUR/USD continues to consolidate since finding support at 1.2750 last week. The 1H chart shows the market making higher highs and some higher lows, the latest one respecting a projected channel support. If the structure remains the same, another bullish swing can bring the market closer t0 resistance in the 1.2885-1.29 area. However, if the swing fails to break above 1.2850, and holds below the 200-hour SMA, then we have a bearish bias heading into the ECB risk event.

An ECB meeting is the first major event risk this week, so the market might be squaring up for that (ECB statement at 7:45AM EDT or 11:45GMT, Draghi’s press conference at 8:30AM EDT or 12:30GMT). There is resistance around 1.29. A break above this ahead of the risk event brings a bullish stance. It would also challenge some trendlines going back to the 1.3710 high in February and would be rounding out a bottom for some more short-term bullish outlook.

Breakout: As the EUR/USD sets up some nice clean trendlines, support and resistance during consolidation, let’s watch how they break after the ECB meeting for more directional clues.