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EUR/USD - Finally Some Sign of Consolidation

The EUR/USD has been sharply bullish recently, rallying from a 1.0847 August low to a high of 1.1711 yesterday (8/24). Today we are seeing the first retreat in 5 days. I think we should be looking for a week of consolidation.

EUR/USD Daily Chart 8/25
(click to enlarge)

Let's take a look at the 1H chart and wait for a consolidation pattern to form. 

EUR/USD 1H Chart 8/25
(click to enlarge)

The 1H chart shows that the pair has broken a rising trendline from a week ago. Let's see what kind of consolidation forms. If I see the RSI and price form a bullish divergence, I might consider putting in a small long position with a bullish outlook back towards 1.1625. 

I would limit the bullish outlook because the prevailing mode in the medium-term is still at least slightly bearish. The FOMC is still in a better position to turn hawkish than the ECB at the moment. So, we there were to be a consolidation pattern formed and broken to the downside, I would be ready to jump on that too.