the EUR/USD made a bullish break and bounced at the 21 ema zone. The bulls are back in control. But how far can they push before a target is hit? And the bears create a reversal anytime soon? Let’s review this in today’s wave analysis on the EUR/USD.
The EUR/USD is building a bullish ABC (orange) pattern. A bullish breakout above the resistance trend line (purple) is therefore likely. The first target (red circle) is the Wizz 6 level and the 78.6% Fibonacci retracement level at 1.1960. If price action responds with a bull flag chart pattern, then a continuation higher will take price to the 2nd target zone at 1.20-1.2050 where traders can see a confluence of 161.8% Fibonacci target, 100% Fib target, and Wizz 7 level.
However, a strong bearish price action signal at the first target could indicate a reversal. Helping the turn around is the potential head and shoulders reversal chart pattern (red boxes). This confirmation becomes stronger especially if price action makes a lower high and lower low. In that case, a 5 wave pattern is expected within the wave C (purple) of wave 4 (pink) and price action could build a serious retracement. Only a break above the Wizz 7 level would clearly confirm the uptrend.