Forex Technical Update

Previous: EUR/USD Holds at Triangle Support Ahead of Bernanke Speech (8/30)

EUR/USD 4H Chart 8/31/2012 6:50AM EDT


Following up with the bounce in EUR/USD from a projected triangle support during late 8/30, the market pushed it higher during the 8/13 Asian-European session. As gear up for the 8/31 US session, the pair has broken above a projected triangle resistance, and is now focused on the pending break of the 1.2590-1.26 consolidation resistance area.

In the previous update, I noted that hold below 1.2535 could be a sign the bears are in charge and likely focused on testing 1.24. Now, if the market can 1) clear 1.26, 2) hold above 1.2535 in a throwback, I think the signs will be very clearly bullish, exposing the next resistance pivots at 1.2685 and 1.2750 for next week.

If there is throwback that pushes below 1.2530, things become unclear, and a possible false breakout is at hand. A false breakout to the upside after a key risk event can be a forewarning weakness and further downside, with focus back on the rising trendline and the 1.24 handle.

The Jackson Hole Symposium is a key risk event for the USD. Here are some notes taken from the previous EUR/USD update:

" Risk Events:
Tomorrow (8/31), Bernanke will make a speech at the Jackson Hole Symposium in Wyoming. His tone on QE will be compared to that of the FOMC meeting minutes which showed more urgent consideration of easing. Maybe then, we can break out of the triangle. Then, if the break can sustain through the 1.24-1.26 range, we have a breakout and likely direction for the next week. Christine Lagarde, head of the IMF, will be speaking on Friday as well, but probably near the close of the week's retail trading, so the effects will not likely be seen on the charts until the start of next week's trading. Since Draghi will not be able to attend, Lagarde's speech might be what the market will focus on in lieu of the ECB president."

EUR/USD 4H Chart 8/31/2012 6:57AM EDT


Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.