On EUR/USD we see price trapped in a big consolidation pattern that looks like a triangle. It's a five wave correction, a continuation pattern that can after its completion push price lower into a strong decline. At the moment we see price trading in the final wave E, that could be looking for a top near the 61.8 or 78.6 Fibonacci ratio sometime this October. We also need to understand that triangles are very tricky, so it's important that traders wait on a broken red support line and push beneath wave D swing low before big wave IV can be considered as finished.

EUR/USD, Daily

A Triangle is a common 5 wave pattern labeled A-B-C-D-E that moves counter-trend and is corrective in nature. Triangles move within two channel lines drawn from waves A to C, and from waves B to D. A Triangle is either contracting or expanding depending on whether the channel lines are converging or expanding. Triangles are overlapping five wave affairs that subdivide 3-3-3-3-3.

Basic Triangle pattern: