Possible short around current price (1.386/7X) within the smaller wedge. Targeting the lower trend line (low 1.37XX region). Use tight stop loss since price can just stay here until NFP tomorrow then spike up (Scenario 2).
Once price hits the lower trend line of the smaller wedge (low 1.37XX region), this yields a possible long entry with a stop loss below the trend line. Targeting the top trend line of the bigger wedge (mid 1.39XX region).
At this point, scenario 2 comes into play.
Scenario 2:
Wait for price to hit top trend line of the bigger wedge (around mid 1.39XX region) for a possible short. First target is the low 1.38XX region (previously resistance) Second target is the bottom trend line coming in at the low 1.36XX region. Consider exiting if price closes above top trend line.
NOTE: This pair has shown a strong negative correlation with USD/CHF lately. So if you plan to trade on my analysis tomorrow; I suggest you pick either EUR/USD or USD/CHF. Don't double up and take both, just pick one and go with it since they both have the same risk reward.
I personally am leaning towards USD/CHF due to the fact that the SNB can intervene at any point in time given the high demand for CHF.
Exchange Rates 101: Demand = Buy, People buying CHF means X/CHF goes down. Back in 2011, the SNB pegged EUR/CHF at a fixed exchange rate of 1.2000 due to the excessive demand for CHF, which was causing problems for their economy.
UPDATE: GIVEN TIME LAPSE SINCE I POSTED THIS ANALYSIS, ENTRY REGION SHOULD BE MOVED TO HIGH 1.39XX to 1.4000, PRICE WILL NOT HIT THE TREND LINE IN THE MID 1.39XX REGION.
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UPDATE: GIVEN TIME LAPSE SINCE I POSTED THIS ANALYSIS, ENTRY REGION SHOULD BE MOVED TO HIGH 1.39XX to 1.4000, PRICE WILL NOT HIT THE TREND LINE IN THE MID 1.39XX REGION.
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I've decided that I WILL NOT be taking a position on EUR/USD. I will instead focus my attention on USD/CHF (since it's the opposite of EUR/USD, no point in loading both).
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As mentioned last week, I didn't take this one but I hope some of you guys did. Loading shorts in the mid 1.39XX region and riding it down to the current lows would've yielded 125-150 pips.
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An alternate view compared to the comment I just posted on my Long GBP/USD chart, if GBP/USD is in the driver seat and starts to break higher highs, it could very well drag EUR/USD up with it and thus, this will shoot past the 1.4 handle. So proceed with caution, you'll have to watch EUR/USD, GBP/USD and USD/CHF simultaneously to determine the general direction/driver.
Update: Based on how markets closed (no pinbar), trade is still valid, looking for shorts in the mid 1.39XX region.
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Oops, I meant no pinbar on USD/CHF (in regards to my previous comment of USD/CHF going back down).
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Update: Watch USD/CHF, if it goes down again (go read the comments on that analysis), then EUR/USD may very well go back up to my entry zone for shorts.
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Update: Price didn't hit my target entry zone, good NFP caused EUR/USD to drop, I was hoping it would spike up first then drop but it didn't happen. Currently we have a pinbar on the daily chart but we still have 8 hours left today before the candle closes so anything can happen.