The price action has been developing a massive Ascending Wedge that was highlighted in our previous analysis of the pair. This implies that the EURUSD may finally be ready to break away into a new downtrend.
These expectations are further substantiated by the MACD, which is underpinning a divergence in the making. Such a reading of the indicator is to be expected if the pair is indeed about to establish a decisive breakdown.
Less risk-averse traders could look for an opportunity to sell around the current market price; however, they should place tight stop-loss orders just above the latest swing high.
They should pay close attention to the behaviour of the price action around the lower boundary of the Wedge and the major support level at 1.22196. The significance of the former stems from the fact that it coincides with the 50-day MA (in green), while the latter is converging with the 20-day MA.
If the price manages to break down below the two decisively, the next target for the emerging downtrend would be encapsulated by the major support level at 1.21715. A deeper correction could fall to the psychologically significant 23.6 per cent Fibonacci retracement level at 1.21327.
These expectations are further substantiated by the MACD, which is underpinning a divergence in the making. Such a reading of the indicator is to be expected if the pair is indeed about to establish a decisive breakdown.
Less risk-averse traders could look for an opportunity to sell around the current market price; however, they should place tight stop-loss orders just above the latest swing high.
They should pay close attention to the behaviour of the price action around the lower boundary of the Wedge and the major support level at 1.22196. The significance of the former stems from the fact that it coincides with the 50-day MA (in green), while the latter is converging with the 20-day MA.
If the price manages to break down below the two decisively, the next target for the emerging downtrend would be encapsulated by the major support level at 1.21715. A deeper correction could fall to the psychologically significant 23.6 per cent Fibonacci retracement level at 1.21327.
