Germany and U.S. clash (on the forex field)

The U.S. and Germany kick off a “massive” World Cup match in just a few hours, but the currencies of the two countries have also been locked in a tight competition this week.

Yesterday, it appeared the Germans (and the rest of the Eurozone) were pulling ahead with an attempted breakout from the EUR/USD’s 3-week symmetrical triangle pattern (see 4hr chart below). However, the U.S. stepped up its game at the last second and drove the pair back down to the bottom of its triangle near 1.3600.

As we go to press, the pair is inching below the lower trend line, but given the failed upside breakout yesterday, it would be prudent to wait for a daily close below this level before confirming the breakdown.

For the uninitiated, a breakout from a symmetrical triangle pattern suggests a strong move in the same direction. Using the measured move method of projecting a target based on the “height” of the triangle points to a possible 150-pip move once the breakout is confirmed, which could drive the EUR/USD either back up toward 1.3800 or down to new 2014 lows in the mid 1.3400s, so there could be plenty at stake here for traders.

Unfortunately, the secondary indicators are not giving any advance warning of which way the pair may trend next. The RSI is essentially neutral near the 50 level, while the MACD is rolling over, but still holding above the 0 level, showing receding bullish momentum.
 


Source: FOREX.com

Coincidentally, the resolution of the German-U.S. battle in the FX market may take place at the same time as the countries’ World Cup clash. Oddsmakers favor the Germans on the futbol pitch, but the Americans currently have the upper hand on traders’ screens. No matter how these situations resolve, fans and traders are in for some serious excitement over the course of the day!

About the Author
Matt Weller

Senior Technical Analyst for FOREX.com. Matt has actively traded various financial instruments including stocks, options, and forex since 2005. Each day, Matt creates research reports focusing on technical analysis of the forex, equity, and commodity markets. In his research, he utilizes candlestick patterns, classic technical indicators, and Fibonacci analysis to predict market moves. Matt is a Chartered Market Technician (CMT) and a member of the Market Technicians Association. You can reach Matt directly via e-mail (mweller@gaincapital.com) or on twitter (@MWellerFX).

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