EUR/USD: Pennant Pattern Upside Breakout

Daily Timeframe -

Another currency that has earned a spot on this week’s Market Insight is the euro. Against the US dollar, Europe’s shared currency advanced 0.5% last week; a large portion of that upside was seen on Friday.

For those who read the previous analysis, you may recall that EUR/USD has been testing the mettle of the 50-day simple moving average since late June (currently $1.0858). Withstanding several downside attempts, buyers eventually put in an appearance on Friday and rallied +0.7%. As a result, a breakout above a pennant pattern emerged (fixed between $1.1012 and $1.0844), offering buyers a potential breakout opportunity. While the identification of the pole can be subjective, I selected between the low of $1.0733 to the high of $1.1012. Consequently, Friday’s upside breakout will encourage pattern traders to extend the value of the pole from the breakout point to identify a profit objective (blue arrows), which, according to this chart, is at $1.1184 (north of resistance at $1.1138).

Based on daily chart studies, buyers will likely remain at the wheel this week, targeting the YTD high of $1.1096, followed by resistance at $1.1138 and finally, the pennant pattern’s profit objective at $1.1184.