EUR/USD rallies and seems determined to reach new highs in the short term after the price has escaped from a minor Falling Wedge pattern. I said in yesterday's analysis that EUR/USD could come back higher if the price confirms the continuation pattern.
It seems that the correction has ended after EUR/USD false breakdown below the 1.1200 psychological level. The pair edges high today and resumes yesterday's bullish momentum, but it remains to see how it will react later after the eurozone and the US manufacturing and services data is released.
You can see that yesterday's candle has swallowed the last three day's drop signaling that the bulls are very strong and they could force the pair to jump higher. EUR/USD is almost to reach the next upside target represented by the upper median line (ML) of the black descending pitchfork, a valid breakout above it will confirm a larger upside movement.
EUR/USD could decline again and it could resume the corrective phase only if the price registers another false breakout above the upper median line (UML). A pin bar or a bearish engulfing right on the upper median line (UML) will bring a short opportunity.
The Falling Wedge is a continuation pattern, but only a valid breakout above the R2 (1.1383) level, another higher high, will validate a further increase towards 1.1494 high and towards 1.1600 level.
- EUR/USD Trading Tips
Buy from above the R2 (1.1383) level, if the price makes another higher high. The current increase could be only a temporary one if the price registers another false breakout above the upper median line (UML). I believe that a valid breakout above the upper median line (UML) will announce a valid breakout above the 1.1383 as well, the R3 (1.1622) could be used as a major upside target.
A short opportunity will be confirmed if EUR/USD makes another lower low, to decrease, and close below the 1.1167 level, the next target will be around 1.1000 psychological level.
