EURUSD Flatlines as Breakout From Second Pennant Looms

In today’s technical analysis, we turn our attention to EURUSD, where the overall sentiment remains positive, but recent price action has settled into a narrow sideways consolidation. Despite the broader bullish tone, volatility has dropped significantly over the last two days, and the pair is coiling within a smaller pennant formation.

Looking at the recent structure, a larger pennant pattern began forming in early April, following a strong uptrend. This classic continuation pattern resolved to the upside, confirming the strength of the bulls and propelling the price higher. Since then, a new, smaller pennant has developed, starting with Friday’s candle and extending through a very quiet Monday and now into Tuesday, which—so far—shows even lower volatility.

From a technical standpoint, this consolidation signals a buildup before the next move. The direction of the breakout will determine the short-term outlook:

• A breakout to the upside would serve as a continuation of the current bullish trend, triggering a buy signal and targeting the next resistance levels higher.

• A downside breakout, however, would hint at a deeper correction, shifting the sentiment temporarily bearish and possibly aiming for support zones below 1.12.

For now, traders should watch closely for a breakout of the pennant structure. With volatility compressing, a decisive move could happen at any moment, and it will likely set the tone for the rest of the week.

Source: https://www.axiory.com/analytics/technical-analysis/eurusd-flatlines-as-breakout-from-second-pennant-l