EUR/USD: The Cup & Handle Price Pattern In Progress
Technical Market Outlook:
The EUR/USD pair has rebounded nicely from the lows of 1.0889 and is heading back towards the last swing high seen at 1.1018. Moreover, the recent developments on the H4 time frame chart might indicate a potential Cup and Handle pattern: the market is in progress of a Handle now. This is a trend continuation pattern and will likely result in a dynamic breakout above the last swing high. The strong and positive momentum indicates the bulls are still in charge of the market, so it supports the short-term bullish outlook. The key technical support is seen at the level of 1.0829 and the intraday technical resistance is located at 1.0915 and 1.0966.
The cup forms after an advance and looks like a bowl or rounding bottom. As the cup is completed, a trading range develops on the right-hand side and the handle is formed. A subsequent breakout from the handle's trading range signals a continuation of the prior advance. Like any technical pattern, false signals can occur. It is essential to use additional indicators or confirmatory signals to validate the pattern before entering a trade.
The daily time frame chart shows up a potential target for the Cup and Handle price pattern. The projected target is located at the level of 1.1310 measured fromt he last swing high located at 1.1018. The overall advance might be even 2.66%.
Weekly Pivot Points:
Pivot Points are key price levels used in technical analysis to identify potential trend reversals, support, and resistance levels in financial markets.
WR3 - 1.1289
WR2 - 1.1149
WR1 - 1.1022
Weekly Pivot - 1.0882
WS1 - 1.0755
WS2 - 1.0615
WS3 - 1.0488
Trading Outlook:
On the weekly time frame chart the EUR/USD pair reversed from the 61% Fibonacci retracement positioned at 1.0963 after a fake breakout was made. To continue the up move a weekly close above this level is needed. The breakout would serve as the initial signal for a potential long-term trend reversal in favor of the Euro, but for now the price is still under the bearish pressure and the is no indication of potential swing low yet. The key technical support is seen at the level of 1.0666.
EUR/USD H1 Intraday Indicator Analysis:
- 17 out of 22 technical indicators are showing Buy signal, 4 indicators are Neutral and 1 shows a Sell signal
- 15 out of 18 moving averages are showing Buy signal, 3 are showing Sell signal
Sentiment Scoreboard:
The general sentiment on the scoreboard is bullish (59% vs.41% bears). Last week sentiment remains bullish as well (63 bulls vs.37% bears) while the last three days sentiment is bullish as well (58% bulls vs.42% bears).
Strategic Trading Insights:
Potential Actions:
- Traders might consider a long position if the Cup & Handle pattern breaks above the current resistance, with a cautious eye on the RSI for signs of overbuying.
- It's important to set stop losses, considering the support level at the 50-period DEMA and potential reversals if the pattern fails to materialize.
- Monitor the EUR/USD pair for a breakout above 1.1018, validating the Cup and Handle pattern.
- Utilize additional indicators and sentiment analysis for trade confirmation.
- Consider the 1.1310 level as a potential target for long positions.
- Remain cautious and watch for any shift in the sentiment or indicator signals.
Useful links:
Important Reminder:
The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.
Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.
