EUR/USD Approaching Key Level of Interest
- EUR/USD has been in an uptrend since that start of 2020 – after the US acted upon its quantitative easing (QE) programme which broke the downward drift in EUR/USD since 2018. The rally from the QE programme caused USD to depreciate off-setting gains in US stock market.
- From the start of QE, the market had formed an upward channel, but has been testing the top of the channel. Most recently it was rejected once again by the top channel line (turquoise). Zooming out, one can view the EUR/USD in a multi-year range and prices are reaching the top.
- The current price action seems to be 2-legs completed in a 3-legged wedge pattern – hence market is poised to have one final leg up to test the top of the range, while forming a 3-legged wedge pattern which would signal a reversal. Bulls will seek to enter at the test of the green line which if market does so would form a clean wedge pattern. However markets are seldom clean and may more likely test the orange line before forming a last leg.
- Bears will want to short after the last leg forms, and would want to see either a last leg to test the most recent high with lack of momentum, or a last leg that tests the range high. In the latter case they may enter a small position at the test, and scale in at the breakdown of the neckline of a mini double top pattern that may form at the previous range high.
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