Tomorrow the ECB will hold a meeting, we will find out if there will be a change in monetary policy under the leadership of Christine Lagarde and possibly what steps the bank intends to take to support the EU economy weakened by the covid-19 virus.

Most analysts believe that Thursday’s meeting (10.09) will have little impact on the Euro exchange rate and that it will return to increases in relation to the USD.

I decided to analyze the EURUSD pair exclusively from a technical point of view, i.e. I look at what the chart suggests, and tomorrow’s ECB will show whether this analysis, in a collision with the fundamentals, has shown the right direction.

EURUSD Daily 10.09
EURUSD Daily – today’s daily candle has created a bullish outside bar formation

Let’s start with the daily chart. The price of the pair, from the end of July, moves in an bullish channel.

The last two days the price oscillates around the support of this channel, and today’s daily candle has formed a bullish outside bar.

According to my strategy, breaking out of this formation may indicate the direction for this pair for several consecutive sessions.

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The indicator of whether the breakout direction will be continued is MACD oscillator.
If the breakout is upwards and the MACD starts to grow (turns green) there is a high probability that the pair will continue to grow. The target for buyers may be the channel resistance, currently 1.2030

EURUSD H4
EURUSD H4 – if the bottom of the formation (red rectangle) breaks , the change of direction on the MACD oscillator will confirm the continuation of this break-out.

If there is a downward break-out, most likely the MACD will maintain the downward trend (it will not change its “colour”) and the situation will not be entirely clear… To confirm that the downward break-out will continue we will have to look at the H4 chart.

Currently the MACD is increasing, but if the indicator starts to decrease after the breakout, we can treat it as a confirmation of further declines.

The sellers’ target may be a demand zone starting at 1.1720.

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