On the hourly we have a very obvious continuation triangle, FX patterns are manipulated just as much as Equities, so the implication of the pattern is an upside breakout. We also know that roughly 80-85% of reversals begin with a false breakout taking advantage of technical analysis to fuel a counter move.
On a 5-min chart we have a parabolic spike, I wrote earlier to a member that it would likely reverse as these spikes do, especially when breaking out of a channel. Since then it's reversed and climbed a bit in a wedging pattern, but has not threatened the earlier highs. I believe, although I don't know for sure, that the knee jerk reaction may have been due to the possibility of an ECB rate hike. However, a knee jerk reaction is not always a well thought out reaction and the consequences of a rate hike have negative implications for the 17 member Euro zone. We also have to understand where we are in the larger trend (see the first chart).
This is the price action in the EUR/USD pair on a 1 min chart after the parabolic advance reversed.
This triangle looks like it will be resolved soon.
Compare the FXE to this chart of UUP showing a positive divergence and we have a hint of the probable resolution of the FX pair's triangle.
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