Over the past couple of months, price formed an ascending triangle pattern, which we saw the initial breakout in the middle of May. Ever since, we had price consolidate between the chart pattern's resistance and the breakout's high at 1.566 - 1.585. We saw this move continue for over a month.
Recently, in early July, we did see price make a huge rejection to the old 1.566 resistance level, new support level, and price ended up breaking above the recent high at 1.585.
In the short-term, we can see price has formed an ascending channel as it's heading higher from the long-term break of the ascending triangle pattern. Currently, price must go below the previous higher high at 1.596 to make a touch and rejection off the channel's bottom, to continue the trend's formation.
Later today, the European Central Bank (ECB) will publish its monetary policy decision for July. As parts of the Eurozone experienced flooding and the Delta variant limited the momentum of economic recovery, its like the ECB President will continue to look at the foreseeable future before making hard decisions. This won't be all negative though, as increased vaccinations and restriction easing will continue to the Euro's economic activity.
The Australian Dollar on the other hand, continues to battle with rising coronavirus cases and the possibilities of more lockdowns in cities.
For this reason, unless the ECB turns out more dovish than expected, we'll likely see E/A head higher and continue the trend. I'm looking out for a touch and rejection of the channel's bottom for this.
Looking at retail sentiment, E/A traders are actually quite mixed on this market, as there isn't a clear one-sided bias yet. Sentiment is mixed and traders are essentially waiting on the next confirmation before we see a one-sided market.
Over the next couple of weeks, we're got a few high and mid-impact news events coming out, more so for the Euro. The Euro essentially has a chance to out-perform the AUD, and depending on the outcome of these events, and the state of their economy, we could see the Euro gain strength and continue heading higher in EURXXX markets, such as E/A that we're looking at.
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