EUR/USD the Ending Wedge breakout offers a downward bias
DXY (USD index)- the daily chart highlights the index stalling and correcting higher close to the 61.8% pullback level of 102.11. This would suggest we are currently within the bullish BC leg of a Gartley formation.
The one-hour chart highlights an Expanding Wedge pattern. This formation has an eventual bias to break to the upside. A break of 102.50 is needed to confirm follow-through bullish momentum. Bespoke resistance is located at 103.50. The measured move target for this pattern is 103.80. The Elliott wave theory would suggest a bullish wave count to the 261.8% extension level of 103.48.
EUR/USD - the four-hour chart highlights the major currency pair breaking out of an Ending Wedge pattern to the downside. The measured move target is at 1.0852. We have seen a retest of the breakout at 1.0980. Bespoke support is located at 1.0890. We have a 78.6% pullback level at 1.0889.
Conclusion – with a retest and rejection of the wedge breakout level, the bias is bearish. However, placing a short entry at 1.0980 targeting the 78.6% pullback level and bespoke support at 1.0890 with a stop loss above the trend of higher highs at 1.1032, only offers a risk reward setup of 1.8R. I do not regard this as ample to execute short trade.
Resistance: 1.0980 (retest), 1.1018 (swing high), 1.1032 (above the trend of higher highs)
Support: 1.0916 (61.8%), 1.0890-89 (78.6% and bespoke), 1.0852 (measured move)
The one-hour chart highlights an Expanding Wedge pattern. This formation has an eventual bias to break to the upside. A break of 102.50 is needed to confirm follow-through bullish momentum. Bespoke resistance is located at 103.50. The measured move target for this pattern is 103.80. The Elliott wave theory would suggest a bullish wave count to the 261.8% extension level of 103.48.
EUR/USD - the four-hour chart highlights the major currency pair breaking out of an Ending Wedge pattern to the downside. The measured move target is at 1.0852. We have seen a retest of the breakout at 1.0980. Bespoke support is located at 1.0890. We have a 78.6% pullback level at 1.0889.
Conclusion – with a retest and rejection of the wedge breakout level, the bias is bearish. However, placing a short entry at 1.0980 targeting the 78.6% pullback level and bespoke support at 1.0890 with a stop loss above the trend of higher highs at 1.1032, only offers a risk reward setup of 1.8R. I do not regard this as ample to execute short trade.
Resistance: 1.0980 (retest), 1.1018 (swing high), 1.1032 (above the trend of higher highs)
Support: 1.0916 (61.8%), 1.0890-89 (78.6% and bespoke), 1.0852 (measured move)