EURUSD Analysis – Short-term bullish reversal

EURUSD Analysis – Short-term bullish reversal

First half of August brought us a strong drop in the value of the EURUSD. That was largely anticipated as the price was inside of the symmetric triangle and was forming a right shoulder of the H&S pattern. The price went down sharply, triggering a major long-term sell signal, after the EURUSD broke the neckline of the H&S.

EURUSD

Today's occasion is a counter trend trade and it seems like this is only a short-term opportunity for several pips. After a very strong decline, EURUSD is trying to rebound and the price is creating an inverse head and shoulders pattern (yellow). That can trigger us a short-term buy signal, especially that the neckline (blue) was already broken and today, successfully tested as a closest support. Despite this pattern, I do not see the chances for a bigger reversal. The price should not climb above the 50% Fibonacci and the ultimate horizontal resistance on the 1.154 (violet).

 

As long, as we stay below the 1.154, the sentiment in the long-term is still negative. In the short-term, buyers can be optimistic but remember that going against the trend is always more risky than with it.

First half of August brought us a strong drop in the value of the EURUSD. That was largely anticipated as the price was inside of the symmetric triangle and was forming a right shoulder of the H&S pattern. The price went down sharply, triggering a major long-term sell signal, after the EURUSD broke the neckline of the H&S.

EURUSD

Today's occasion is a counter trend trade and it seems like this is only a short-term opportunity for several pips. After a very strong decline, EURUSD is trying to rebound and the price is creating an inverse head and shoulders pattern (yellow). That can trigger us a short-term buy signal, especially that the neckline (blue) was already broken and today, successfully tested as a closest support. Despite this pattern, I do not see the chances for a bigger reversal. The price should not climb above the 50% Fibonacci and the ultimate horizontal resistance on the 1.154 (violet).

 

As long, as we stay below the 1.154, the sentiment in the long-term is still negative. In the short-term, buyers can be optimistic but remember that going against the trend is always more risky than with it.