(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)
3/31/2009 € EUR/GBP € Price action on EUR/GBP, a daily chart of which is shown, has formed yet another triangle consolidation pattern. This currency pair has recently been relatively reliable with regard to forming and breaking these types of consolidations. Although triangles are most often considered continuation patterns, eventually breaking out and continuing in the same direction as prior to the consolidation, they can also often serve as reversal patterns. In any event, a breakout of the triangle in either direction is a potential trading opportunity. If this triangle becomes a continuation pattern by breaking to the upside, price should first target major resistance around the 0.9500 price region, a significant prior support/resistance level. If this triangle becomes a reversal pattern by breaking to the downside, price should first target major support in the 0.9100 price region.
James Chen, CMT
Chief Technical Strategist
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