We did not have many reasons to be optimistic, at least from the technical point of view. Surprisingly, the main pair, started October on the front foot, giving hope to the short and mid-term bulls.
The reversal, which we are witnessing right now, started with the inverse head and shoulders pattern (yellow rectangles, orange neckline). This formation, is in the same time a false breakout below the long-term lows on the 1.093 (grey line). False breakouts are this kind of structures that love to bring the opposite signal, so in this case – buy. It seems, that everything is ready for this scenario – the price is back above the grey area and already broke the neckline.
What is more, EURUSD holds above the mid-term horizontal support on the 1.096 (green). For those that prefer to be safe than sorry, there is still one more resistance left. That is the mid-term down trendline (red), connecting lower lows since the beginning of August. Breakout of that one, will leave sellers pretty much empty handed.
The positive sentiment stays here, as long as the EURUSD is trading above the grey line. Bullish outlook, will be strengthened, once the price will break the red line, which in the current situation seems very probable.
This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis
This article was originally posted on FX Empire
More From FXEMPIRE:
- E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Strengthens Over 26508, Weakens Under 26390
- Oil Price Fundamental Daily Forecast – Underpinned by Optimism Ahead of US-China Talks; Supply Issues
- Natural Gas Price Fundamental Daily Forecast – Colder/Higher Demand Risks Could Underpin Prices
- EUR/USD continues the Positive Sentiment from the Last Week
- Asia Shares Mixed as Muted Reaction to Jobs Report Gives Way to Renewed Trade Talks
- Euro Is Up for Further Growth