CPI really moved the market! The inflation data didn’t disappoint and allowed the EURUSD to escape from the mid-term sideways trend. Not directly, because the data was released yesterday and the breakout just happened today. However, the increased momentum can definitely be contributed to Wednesday’s CPI.

EURUSD fell in a sideways trend at the end of April. The sideways trend can technically be described as a rectangle (orange). We had a horizontal resistance on the 1.058 and a horizontal support on the 1.048, around 100 pips range. Over the past few days, that boring sideways movement became even less interesting, and the volatility drop allowed for a smaller pennant (blue) to be created.

EURUSD H1 12.05 11:40 GMT

CPI helped to introduce some life into the price. After the initial roller coaster, the price chose the southward direction. We broke the lower line of the pennant and the horizontal support on 1.048. EURUSD managed to set new, long-term lows and trigger a refreshed sell signal.

At some point, we may see an upward movement which would be typical price action for testing the broken support as a resistance. As long as we stay below the lower orange area, the sentiment is definitely negative.


About Author

During his career, Tomasz has held over 400 webinars, live seminars, and lectures across the globe. He was also an academic lecturer at Poland's Kozminski University. In his previous work, Tomasz initiated live trading programs, where he traded on real accounts, showing his transactions, providing signals and special webinars for the accounts; none of which were ever negative. Tomasz gives preference to a technical approach to trading: mainly price action with very strict money management rules. He believes that the most important thing in trading is your mind, so it is much better to focus on trading psychology than to look for the Holy Grail of trading systems.

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