Key Highlights
- EUR/USD started a downside correction from the 1.2260 resistance.
- A crucial contracting triangle is forming with resistance near 1.2205 on the 4-hours chart.
- GBP/USD could attempt an upside break above 1.3620 and 1.3650.
- Gold price is consolidating below the key $1,900 resistance zone.
EUR/USD Technical Analysis
This past week, the Euro started a downside correction after it failed to clear 1.2260 against the US Dollar. EUR/USD broke the 1.2220 support, but stayed above the 1.2150 support.
Looking at the 4-hours chart, the pair traded as low as 1.2152 and remained well bid above the 100 simple moving average (red, 4-hours). There was a recovery wave from 1.2152 and the pair climbed above the 1.2200.
However, the pair failed to clear the 50% Fib retracement level of the downward move from the 1.2256 high to 1.2152 low. Moreover, there is a crucial contracting triangle forming with resistance near 1.2205 on the same chart.
A clear break above the triangle resistance and 1.2220 could open the doors for a fresh increase. The next major resistance on the upside is near 1.2260, followed by 1.2280.
If there is a downside break below the triangle support, there is risk of a breakdown below the 1.2150 support and the 100 SMA. In the stated case, the pair could grind lower towards the 1.2120 and 1.2100 support levels.
Looking at GBP/USD, the pair seems to be facing a major hurdle at 1.3620, above which it could rally to 1.3700. Similarly, gold price might gain bullish momentum if it clears the $1,900 resistance zone.
Economic Releases
- Dallas Fed conducts the Texas Manufacturing Dec 2020 – Forecast 12.0, versus 12.0 previous.
