EUR/USD Descending Triangle (May 8, 2013)
EUR/USD is slowly edging closer and closer to the 1.3000 major psychological support again as the pair has formed lower highs on its 1-hour chart. In fact, it has created a descending triangle pattern on the same time frame.
For now, there are no major reports due from the euro zone, which explains why the pair is currently stuck in a consolidation pattern. The lack of data could keep the pair inside the triangle, with some opportunities to scalp off the top or the bottom of the formation.
Only the medium-tier German industrial production report is due from the region today and this report is projected to print a 0.1% decline, which is a disappointment compared to the previous 0.5% uptick. A weaker than expected reading could push EUR/USD to test the bottom of the descending triangle or even make a breakdown, depending on the actual result.
Stochastic, however, is suggesting a potential bounce back up as it is currently pointing north. Aim for the top of the triangle for a day trade or the previous highs around 1.3100 for a longer-term setup.
By Kate Curtis from Trader's Way