EUR/USD – Bullish Breakout and the ABC Scenario

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EUR/USD - Bullish Breakout and the ABC Scenario

The USD started the week with some resilience but relinquished those gains by Wednesday. The EUR/USD seems to be regaining its stride that began last week. Let’s follow up with the bullish price action.

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The 1H chart shows that during the 4/21 session price already started to crack this week’s falling channel resistance. There was a retreat from 1.0780 but price action continued higher during the 4/22 session. As we get ready for the US session, it is testing the 1.08 handle. Price has essentially kept above the cluster of 200-, 100-, and 50-hour simple moving averages (SMAs), and the RSI has pushed above 60, which reflects loss of the prevailing bearish momentum this week.

The EUR/USD looks poised to retest the 1.0848 high from last week. Looking at the 4H chart, if price pushes above 1.0848, there would be a possible ABC correction scenario, where wave C is similar to wave A. This scenario would give EUR/USD a bullish projection towards the 1.10 handle.

At this point, failure to reach 1.0848, and a dip below 1.0715 would be a sign that EUR/USD has flattened. We should then wait for further consolidation to form a structure from which we can observe a breakout.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.