The EUR Continues Developing In A Relatively Tight Consolidation

It’s becoming clearer and clearer that EUR/USD is forming a sideways correction within a rather vague trend channel which can hardly be called anything – it’s neither a flag, nor a pennant. To characterize it as a flag the pair should rally to 1.1850 – 1.1870, i.e. to the resistance trend line of the channel, but so far that has not happened.

Today the ECB announced its interest rate and there were no changes, but the press-conference of its Governor Mario Draghi gave traders good opportunity to begin selling the EUR massively, and the pair dropped from 1.1740 to 1.1650.

Still, until there is a breakout below the support trend line, we could expect a rally. I doubt that the pair will rally much more though. In my opinion, if it reaches the resistance trend line short positions should be in order, and in case there’s a breakout below the support trend line the depreciation could reach 1.1350 – 1.1300.