Since the end of January EURUSD has traded in triangle consolidation. The Euro appreciation has been stopped by returned concerns about debt position of Spain and Italy. In addition uncertainty about French elections and upcoming Greek one are fuelling market volatility and rising investor indecisiveness.
|EURUSD triangle consolidation|
Such market environment is precondition for technical triangle formation - consolidation. This figure usually is trend confirmation sign, which means that next target could be 1.3550. However, if key support line at 1.30 is broken, than 1.2620 would be reachable. The last is less likely as it would happen if stock market continues with the correction, but still important to consider.
Mentioned target levels are determined by two technical formations that could appear in case of positive or negative breakthrough of the triangle. If the triangle is broken than the following move could be as much as 380 pips the length of the move before triangle was formed. In the positive case the target is limited by cross point of 380 pips length and the trend resistance (the blue line). In the downward case the technical figure “head and shoulders” could be shaped.
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