EUR/USD has managed to form a descending triangle pattern during last 2 weeks and break out of it last Friday. The chart pattern was formed on the daily chart and is quite small (relatively to the breakout depth). The pattern should be quite strong as its bottom line was also a long-term end of the bearish trend lasting from November 26, 2009. The breakout happened near the apex of the triangle. The conservative target (derived from sentimental analysis rather than technical) is located near 1.1800 (green line) — the level of euro’s inception in 1999. This level is a probable next target but, since the price has fallen significantly below the lower limit of the triangle, the risk/reward ratio can be unsatisfying. The next target is the technical target of the descending triangle — 1.1515 (blue line), which can potentially yield a lot of profit with a nice risk/reward ratio:
By the way, I expect a positive weekend gap on EUR/USD tomorrow, so I’d recommend opening a short position from it, especially if it’s high enough.
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