EUR/USD Range Breakout Trade (8-Hour Candlesticks)
After weeks of headlines highlighting the tenseness of the negotiations between the Eurogroup and Greece, the deal reached in the 11th hour on Friday looks like more of an “extend and pretend” compromise. It was a serious blow to the Greeks that voted for change via a Government with the conviction to stand up to the Euro Area. Instead a deal that will delay the inevitable was reached, to the detriment of all parties involved. The deal failed to address the deteriorating situation in the Greek banking system as confidence in the system wanes.EUR/USD rebounded to the upside on Friday after falling earlier, but the rally was fairly muted as the pair continues to consolidate since bottoming at the end of January.
Today’s Greek bank holiday and limited economic releases will mean that EUR/USD will likely continue to trade within a narrow range until the major upcoming events including speeches on Tuesday and Wednesday from ECB President Mario Draghi along with German GDP data and Eurozone CPI figures. These speeches could very well see the EUR/USD pair breakout from the range as Draghi attempts to soothe fears of the deflationary clouds spreading across Europe. In the meantime, between support sitting firmly at 1.1276 and topside resistance at 1.1449, a 173 pip range is ripe for trading. Optimal long positions are taken at the support line and short positions at the resistance line. Any movement outside the horizontal range should be treated as a breakout with a reward target of 105-130 pips with entry points and downside exit strategy set at former support and resistance levels. Positive comments from Draghi and better reception of the newest arrangement from Greece could see confidence temporarily bounce in EUR/USD. But any souring of the outlook could prove devastating for the Euro.
AUD/USD Ascending Triangle Pattern (4-Hour Candlesticks)
