Uptrending EUR/USD Forms Channel

The EUR/USD has been moving in a mark up cycle on the four hour chart since July 14th. This climb has brought the pair often called the "fiber" to the doorstep of 1.4300. This level represents not only a major psychological level, but also significant resistance that was tested during May this year. While 1.4300 is not necessarily a double top (the May high was 1.4340), there is a ceiling that will be waiting there in this area.


The Emerging Continuation Channel Up pattern (below) has formed with a decent Initial Trend; it's neither high nor low but does shows some signs of slight congestion. The slight stall in the rally currently topped out at 1.4291 - just shy of the very 4300 level where selling pressure would be expected to build.





The pattern capitalizes on this with the upper green trend line which is resistance. This level is the potential breakout trigger and currently at 1.4295. If prices can take out this uptrend line resistance, as well as the 1.4305 level, then a channel breakout will have confirmed triggers. The reason to wait for the "05" is to confirm that the "00" has in fact been broken. Of course this is no guarantee of follow-through, but it does decrease the likelihood of a false breakout through this key psychological price level while not giving up too many pips on the entry.


Alternatively, for a set up that would capitalize on a reversal or exhaustion at the 1.4300 level, look to smaller intraday time frames such as the 15 or 30 minute time frames with a rising wedge or channel up alert.

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