The pull-back from the October 3 lows has grown into a mini up-trend, which will probably continue. U.S CPI data released tomorrow, however, potentially provides the impetus for a continuation higher, if it disappoints as many investors expect.
There is further bullish evidence from a right-angled triangle forming on the 4-hour chart which favours an eventual breakout to the upside and move up into the 1.29s. This triangle is currently forming its E leg and this could play out today. Once it finishes the triangle will be technically complete. Thereafter I see a possible breakout higher. For confirmation I would want to see a clear move above the triangle upper-border – perhaps for safety with a 20-pip margin – so above 1.2862, confirming a move up to a minimum expectation at the 61.8% extension of the height of the triangle at 1.2925.
My previous recommendation of a break above the spike-highs at 1.2887 confirming a move up to 1.2995 still stands except I'd moderate my target to a more conservative 1.2975.
Triangles can break either way and, although less probable, a down-side breakout could occur with a move below the 1.2704 lows confirming a wave down to 1.2625.
