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Trade Setup EURUSD on Consolidation Breakout

It has been some time since we did an analysis on EURUSD. First let’s get through the latest macroeconomic events and data and after that discuss about the technical setup.

First of all the economic data posted this week was pretty surprising. The data posted for the Euro Area was good, even better than expectations if we take a look over the PMIs published for both manufacturing and services. Unemployment remained unchanged for the entire Euro Area, but Spanish people got more jobs.

While Europe reported some good news, the US has brought some disappointing data from the economy. Monday the ISM Manufacturing PMI dropped under 50, on Tuesday the Trade Balance was above estimation but the IBD/TIPP Economic Optimism came 49.0 and today the ADP Non-Farm Employment change was 135K, 36K under estimates.

What is next? Tomorrow the ECB will announce the interest rate and after that Draghi will keep its monetary statement and the press conference. At this point the markets are not expecting another rate cut, and the better economic data could sustain this measure. Friday another important economic indicator will be published for the US labor market. If the Non-Farm Employment will come on the same line with the ADP then we might see a fall for the US dollar and a rise for the Euro.

Chart: EURUSD, H1

On the short term we can see that the EURUSD has consolidated in a rectangle. The upper line of the price pattern is at 1.3100 and the lower line is at 1.3050. A breakout on the upper line could get the price quite fast to 1.3150, while a down break could bring the price back to 1.30. This last level seems to have been the equilibrium price for this currency pair for the last 9 months.

Confirmation Level 1: 1.3104                                       Confirmation Level 2: 1.3049

Price Target: 1.3150                                                         Price Target: 1.3000

Stop Level: 1.3083                                                            Stop Level: 1.3070

Trade Setup EURUSD on Consolidation Breakout by