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EUR/USD Breaks Above a Pennant Pattern

EUR/USD rallied last week from its November and 2014-low near 1.2360. Price retreated after hitting 1.2530 and was consolidating in a pennant pattern seen in the 1H chart. During the 12/1 session, price break above this pennant and above the cluster of 200-, 100-, and 50-hour SMAs, showing signs of bullish continuation in the near-term. 

EUR/USD 1H Chart 12/2
(click to enlarge)

After a test of 1.25, price retreated and is essentially testing the commitment of the bullish breakout. If price can hold above 1.2460, We are likely to see some further bullish continuation this week, with the 1.2530 level as the first target, with some common highs in November around 1.2575 as the next target to the upside.

In the 4H chart we can see that the bullish outlook would put price at a range consolidation resistance in the 1.2575-1.26 area. We should expect sellers here again after an ABC correction. 

The fundamental outlook is still bearish for EUR/USD when comparing the monetary policy projections for the ECB against the Fed. So while we should anticipate some bullish outlook in the near and short-term, we should expect sellers to fade the rally.

EUR/USD 4H Chart 12/2

(click to enlarge)

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