Dear traders,
the EUR/USD seems to have completed a triangle chart pattern. The shallow retracement could indicate the end of the wave 4 (pink) and the restart of the uptrend.
The EUR/USD break above the resistance trend line with strong price action confirms that the bulls are back in control.Β
But the real test will be what happens when price makes a pullback. We should expect a pullback to occur before the breakout is 100% confirmed
The internal price swings seem to match an ABCDE (grey) chart pattern within wave 4 (pink). Price is now moving up within a wave 5 (pink) of a potential larger wave 3 (purple).
An unexpected break below the support, however, could indicate a false breakout. This would create a deeper pullback (dotted orange line) towards the 38.2% Fibonacci level, which is expected to act as a bounce.
On the 1 hour chart, price action is building that pullback after the bullish breakout. It is now testing the Fibonacci support levels, which is a key decision zone.Β
A bearish breakout below the bottom invalidates the breakout and indicates one of two things:
A bullish break above 1.2250 should send this pair higher towards the immediate target at 1.2325 with possible extensions at 1.24 and 1.25.
The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter.
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