ZuluTrade Blog

EURUSD breaks the wedge, what now...

Market View | Wednesday, July 28, 2021 4:49 PM GMT

The last month, “Fiber” has been torturing the trading world with its indecisiveness and price fluctuations. Basically, EURUSD hasn’t moved, it has made multiple swings inside a 150 pip zone and until this Monday nothing seemed to affect this pair’s dormant state.
However, at the beginning of the week, something very interesting happened from a technical standpoint and the analysis of it is of great importance, not only to assess what it symbolises as a move but also to find potential targets on the price chart.

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The “Wedge”.
As you can see, EURUSD has been forming for weeks a falling wedge in the four hour chart. As the price was moving downwards the volatility was decreasing and the completion of the pattern was imminent.
On Monday the pair rallied and broke the upwards part of the wedge and the day after that returned to retest the line with success.
This move was performed “by the book” and a lot of opportunities existed inside that phase.
However, now it’s the time to analyse what this break might possibly mean.

The “what”, “where” and “when”.
So which is the next move of the cross?
No one knows, however, some targets are pretty visible even to an untrained eye both for the Bulls and the Bears.
If it has been taken as an actual fact that the Bulls have taken over and the break of the pattern is valid then the first potential target is the 1.19300-1.19400 zone where the 200 EMA and the 38.2 per cent Fibonacci lie in the daily chart. The elongated bullish divergence in the MACD should also be noted as it adds to the power of the setup.

On the other hand, should bears regain control they will find their first important stop is the 1.17000 level, the round number with the recent swing lows in the chart.

August is close and price action might become tricky and inconsistent. Traders and investors are advised to either stay on the sidelines or be extremely patient and conservative on their risk management.

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Disclaimer
The views expressed do not constitute investment or any other advice/recommendation/
suggestion and are subject to change. Reliance upon information in this material is at the sole discretion of the reader. Opinions expressed in the report do not represent the opinion of ZuluTrade Social Trading Platform and do not constitute an offer or invitation to anyone to invest or trade. Every metric and the statistical number is a result of a past performance, which does not constitute a promise or a certainty for a future one.

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