In recent posts I have spoken about the double bottom that was forming on this pair, highlighting the fact that if it breaks above the neckline, it would suggest a significant move higher.
In the past couple of days we have seen it break above here and as suggested previously, it appears to have gathered some bullish momentum. However, the move may be more short lived than originally expected.
If you look at the chart below, you can see the descending trend line (blue) just above the current price.
If you look at the below chart (same chart but zoomed out to show it over a longer period of time), the pair has been trading below this trend line for almost 18 months. This suggests that it is a significant resistance level and the euro may struggle to break above here. On the other hand, if it does break this level, again it would suggest we’ll see a big move higher.
Author: Craig Erlam