EUR/USD Nears Convergence Point

Daily Forex Technicals | Written by TradersChoiceFX | May 22 09 02:44 GMT |

The EUR/USD is nearing the pivotal point of a consolidating triangle formation, also known as a wedge formation. Although there is a potential for a breakout as the pair attempts to breach the upper trend line for the 4th time, it is likely that the pair continues to trade within the pattern. The resistance from the top trend line and the resistance zone of 1.3950 should exhibit strong price reaction, due to the extent of their existence and the numerous confirming points they have shown. There is a strong possibility that the pair will bounce off either the 1.3950 zone or the upper trend line and continue to trade within the wedge formation. The pair should consolidate towards the convergence point of the upper and lower trend line. Typically the closer the pair is to this point, the more probable the occurrence of a break out. As the pair nears this point, overall price volatility is likely to continue to shrink until a true break out occurs. This trend is exemplified by the graph of the ATR indicator: Currently there is a neutral sentiment among forex traders for the pair as they await further data and information to determine which direction the pair will move. Traders should exhibit extreme caution as the pair is likely to signal many false breaks outs in the coming days Matthew Cherry TradersChoiceFX - Forex Broker