As illustrated above, EUR/USD has broken out of a descending trendline with prices currently displaying signs of breaking above a pendant (continuation structure).
A break out above the continuation pendant structure is likely to see further upside. It is worth noting that prices are now back within a 1.124 – 1.135 range , with the most recent price action respected the lower end of the range (1.124).
US ADP Non-Farm Employment Change has come in at 2,369K versus a previous recording of -2,760k and estimates of 2,900k. Illustrating a massive rebound since last months reading despite being below estimates. 70% of jobs added in June were in leisure/hospitality, trade, construction industries, a significant rebound in industries that once experienced greatest job losses.
ADP data for May was also revised to 3,065,000 jobs added instead of the 2,760,000 jobs lost in May (a huge revision) , taking this into account ADP employment data actually shows a slowdown in June which will likely weigh on dollar strength. This is contributing towards a bullish move on EUR/USD.
Germany have also signalled willingness to support the EU recovery fund during a meeting involving all 27 members of the EU bloc. Germany have previously been a major headwind in the development of the EU recovery fund, therefore this is an additional booster to the Euro.
Potential Entry: When/If prices break the corrective pendant structure to the upside at around 1.12596
Potential Stops: At around 1.12596
This trade carries a risk to reward ratio of around 2.72, with a maximum potential loss of 30 pips and a maximum potential gain of 80 pips. We strongly advise you place stop losses at entry once a trade is at least 15 pips in profit
After reaching TP1 and TP2 at +16 and +41 pips respectively, prices returned back to entry. This trade is now complete.