EURUSD Escapes From the Channel Down Formation

Tomorrow’s a big day for the Euro. We’re going to witness a rise in interest rates and find out the general tone and the outlook for the future from the European Central Bank. Ahead of this event, the EURUSD is already showing signs of strength and optimism. Actually, yesterday, the main pair made a move that technically brought us a proper long-term buy signal.

You’re probably aware of the long-term channel down formation that was present on the EURUSD. It was born in the beginning of February and for months was very reliable and trustworthy. Every contact with the upper line of the channel down was ending with a bearish drop. Until yesterday, when the price smashed through the resistance aiming for new, monthly highs.

That breakout from yesterday cancels the sell signal and gives us a signal to buy. Today, traders are following this path, climbing even higher and establishing new, monthly highs. By the way, we’re also above parity for the first time in October.

Let’s see if buyers will be able to continue with this after the ECB shows its cards. For sure we can expect a lot of volatility and momentum tomorrow on the Euro, so traders with weak hearts should probably avoid the charts on Thursday. A hawkish ECB would confirm the buy signal from yesterday which could magnify the bullish situation on the chart. On the other hand, a dovish ECB could easily bury the buy signal from yesterday. As always, we’ll find out really soon.