EUR/USD Moment Of Truth With Bullish Breakout

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.

Price Charts and Technical Analysis

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The EUR/USD break above the resistance trend line with strong price action confirms that the bulls are back in control. 

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 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. 

A bearish breakout below the bottom invalidates the breakout and indicates one of two things:

  • Either a larger bearish pullback is taking place. In that case, price also needs to break below the bottom of wave C and wave A.
  • Or a larger triangle chart pattern is taking place with an expanded wave d (grey d’) and wave e (grey e’).

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.

(Click on image to enlarge)

 

Disclaimer: The opinions in this article are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit ...

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