EUR/USD (daily chart) has consolidated within a tight range pattern that resembles a pennant formation. The trading week so far has been characterized by market indecision and significantly low volatility in this currency pair, as can be noted by the recent succession of daily doji and spinning top candle patterns.
The current pennant, which can be considered a potential bullish continuation pattern as it has surfaced within a strong bullish trend, occurs after price broke out above 1.3300 two weeks ago and then went on to establish a 10-month high right around 1.3400. Since then, price has fluctuated around the 1.3300 region and progressively tightened its consolidation.
In the event that the pennant pattern succeeds as a trend continuation formation with a breakout to the upside, price could move towards further potential resistance around 1.3500 and then 1.3700. If the pennant fails with a break of the consolidation to the downside, price could make yet another correction towards key potential support around 1.3000.
James Chen, CMT
Chief Technical Strategist
FX Solutions
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