Key Highlights
- EUR/USD started a downside correction from the 1.2260 resistance.
- A crucial contracting triangle is forming with resistance near 1.2205 on the 4-hours chart.
Looking at the 4-hours chart, the pair traded as low as 1.2152 and remained well bid above the 100 simple moving average (red, 4-hours). There was a recovery wave from 1.2152 and the pair climbed above the 1.2200.
However, the pair failed to clear the 50% Fib retracement level of the downward move from the 1.2256 high to 1.2152 low. Moreover, there is a crucial contracting triangle forming with resistance near 1.2205 on the same chart.
A clear break above the triangle resistance and 1.2220 could open the doors for a fresh increase. The next major resistance on the upside is near 1.2260, followed by 1.2280.
If there is a downside break below the triangle support, there is risk of a breakdown below the 1.2150 support and the 100 SMA. In the stated case, the pair could grind lower towards the 1.2120 and 1.2100 support levels.
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