Missed the head and shoulders neckline breakdown on EUR/USD?
The pair could still retest this former support zone before resuming its potential reversal!
Check out these retracement levels on the 4-hour chart
EUR/USD 4-hour Forex Chart by TradingView
The U.S. dollar has been staging quite the rebound this week, as safe-haven flows have been picking up on political shakeups and flaring tensions between Ukraine and Russia.
After trading in a steady uptrend for the most part of August and September, EUR/USD formed a head and shoulders pattern and eventually broke below its neckline support to suggest that a reversal is in the works.
Can EUR/USD attract more sellers on a pullback?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the U.S. dollar and the euro, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The pair is already making its way towards the 38.2% Fibonacci retracement level and could go for a higher pullback to the 50% Fib that’s closer to the former neckline and S1 (1.1690).
If these are enough to keep gains in check, look out for a continuation of the selloff to the swing low near S3 (1.1590) or to fresh bearish targets at S4 (1.1550) then S5 (1.1510).
The line in the sand for a bearish correction could be the 61.8% level that’s near the 200 SMA dynamic inflection point. Just keep in mind that the 100 SMA is above the 200 SMA for now, suggesting that bulls could still have the upper hand.
With that, long green candlesticks closing above the area of interest could suggest that euro bulls aren’t backing down so easily, possibly sustaining the uptrend to R1 (1.1790) or even the next upside targets at R2 (1.1830) then R3 (1.1880).
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
