EUR/USD Forms a Perfect Cup and Handle Pattern: Next Target 1.2100

By Crispus Nyaga
Easy Markets

In 2017, the dollar fell against many currencies. Against the Euro, the dollar fell by a whopping 8%. This fall was attributed to a strengthening the Euro and investors worry about Trump’s policies on trade.

The Bull Run ended on September when the pair reached the 1.2094 level. It then started going down, eventually reaching a low of 1.5558 in November.

A look at the pair’s 6-month chart below shows that it has established a cup and handle pattern.

A cup and handle pattern is a relatively old strategy developed by William O’Neil in 1986 in his book, How to Trade Stocks.

The strategy suggests that in a bullish trend, the financial instrument will form a U-shaped pattern before starting another bullish pattern. In other words, he suggested that in an upward move, the instrument will often pause the momentum and then may resume the upward move. The final part of the cup and handle is a relatively small downward move before the pair establishes a solid upward move. As seen above, the pair started forming a handle position on 4th January.

As I have written before, this year, I expect the EUR/USD pair to resume the upward momentum it started last year. Remember, the Euro area economy is doing well and in the latest ECB minutes, some members were optimistic about the normalization process.

Today, the pair is trading at 1.2040 level as it tries to move to the double top position of 1.2094.

As shown below, I expect the pair to attempt to cross the psychologically important level of 1.2100 as it moves upwards.

By Crispus Nyaga
Crispus Nyaga is a Nairobi-based trader and analyst. He started trading more than 7 years ago as a student. He has published in several reputable websites like The Street, Benzinga, and Seeking Alpha. He focuses mostly on G20 currencies, commodities like Crude oil and Gold, and European and American large-cap companies.