The negative outlook is hampered by the M-formation on the daily chart.
The EUR/USD has stopped at previous lows and has aggressively reversed.
EUR/USD Price Analysis: According to the previous analysis, EUR/USD Price Analysis: The bears are in control and looking for a daily negative extension on the following move towards 1.1805/12.
However, chart patterns and price action should be closely observed, and on the daily chart, a bullish formation has evolved that must be factored into the trade plan.
The completion rate of an M-formation is very high. There is a chance that the market will correct back to the prior lows. The formation’s neckline poses a threat to the short playbook.
“As expected by EUR/USD bears expecting a break of 4-hour support, the euro has certainly melted to the negative following a violation of 4-hour support,” according to the previous research.
Bears have been watching for a shorting opportunity within the daily correction’s build-up of lower highs, which had been losing steam in previous sessions.
Bears were looking for bearish structure on a breach of the support on a lower time frame, such as the 4-hour chart:
“First and foremost, the 4-hour support of 1.1920 must give, shattering the 4-hour dynamic supporting line.”
“If the 4-hour support is broken, the zone will be expected to operate as resistance, which it has done thus far.
Corrections have stalled below 1.1912/23, producing a fresh bearish formation with solid resistance.
The price is currently quite likely to continue to melt, resulting in a daily downward extend towards 1.1805/12, as follows:”
The risk now is that the bulls seize control and move in on the 1.1917 lows on June 24th, as the market is supported by prior lows and correcting. At that time, the old 4-hour support will be put to the test.
Should the price continue higher and beyond there, a stop-loss pushed to breakeven (old 4-hour support near 1.1917) will prevent any losses.
If the market continues to melt instead of completing the M-formation, this will allow for potential gains without putting pressure on the 4-hour barrier or the planned stop loss.
Continue reading
