Classic Chart Pattern Fuels Euro Plunge

The EUR USD reached the apex of a triangle formation and plunged to the downside. The triangle chart pattern is a non-trending pattern and often indicates impending volatility especially as it nears the apex of the pattern. This pattern didn’t disappoint as bids were pulled under support and the market broke sharply.
 
Solid downtrending Gann angle resistance handled every attempt to breakout to the upside this week, causing bullish traders to give up, exposing the market to heavy selling pressure. Once the last breakout attempt failed on Tuesday and the market made a closing price reversal top, all that was left to hold the Euro was an uptrending Gann angle at 1.3234.

Once the bids were pulled and the sellers took control, the daily chart pattern indicated that there was nothing to stop the break until it reached a retracement zone or another uptrending Gann angle. Based on the short-term range of 1.2994 to 1.3283, a retracement zone was created at 1.3138 to 1.3104. The upper target or 50% level was tested this morning, producing a technical bounce, but nothing to indicate major buying was taking place. In fact, it appeared to be more of a profit-taking bounce rather than fresh buying.
 
Further downside pressure today could trigger a test of the uptrending Gann angle at 1.3114 or the Fibonacci price level at 1.31043. Since the main trend is up on the daily chart, a bottom could form in this area, but it would be better if a support base formed first since the height of the rally is often equal to the length of the base. A spike bottom tends to be met with renewed selling pressure after a short retracement to the upside.
 
If you missed the move, be patient for the next one to develop. Watch the trading action inside of the retracement zone for a large bid to appear. If big money likes this zone then they will provide the support for the next rally.