The EURUSD has been correcting in a well-established bearish price channel as visible in this H4 chart. The bearish chart pattern has been very strong and not violated while price action is currently centered on its descending support level. The last six candlesticks suggest this currency pair is attempting to form a bottom at 2013 lows from where we expect it to move higher and keep the chart pattern intact.
MACD has confirmed the bearish chart pattern which points to potential future weakness. The rally which will be initiated due to short covering may be limited to its descending 50 DMA. RSI has reached overbought territory and a breakout from current conditions should initiate the counter-trend rally.
We recommend a long position at 1.2760 with a potential second entry level at 1.2660. We also advise traders to place a stop sell order at 1.2700.
Traders who wish to exit this trade at a loss are advised to place their stop loss level at 1.2700. We will not use a stop loss order for this trade and execute it as recommended. Place your take profit level at 1.2810.
Here is why we think the EURUSD forex pair will move higher
- EURUSD chart pattern has not been violated
- Currency pair trades at support and last six candlesticks point to bottom formation
- RSI trades in oversold territory
- Short covering
- Temporary stability in Eurozone
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