EUR/USD technical analysis: Bulls need a break above 1.1247, CNH strength may help
- EUR/USD has created a falling wedge on the 4-hour chart.
- A move above 1.1247 would activate twin bullish cues.
- Strength in China's Yuan may bode well for the EUR.
EUR/USD's ongoing pullback has taken the shape of a bullish reversal pattern on shot duration charts.
At press time, the pair is trading at 1.1201, having dropped from 1.1243 to 1.1181 on Tuesday, courtesy of the European Central Bank (ECB) President Draghi's dovish comments.
Further, the shared currency is currently down almost 150 pips from the high of 1.1348 registered on June 7. With the retreat from highs near 1.1250, the pair seems to have created a falling wedge on the 4-hour chart.
A wedge breakout would be confirmed if the spot sees a 4-hour close above 1.1216. The sentiment, however, has turned bearish following a Draghi's dovish talk and so it is better to err on the side of caution and wait for a move above 1.1247 before turning bullish.
This is because a break above 1.1247 would activate twin bullish cues: A falling wedge breakout and a violation of the bearish lower highs pattern. A 4-hour close above 1.1247, if confirmed, would open the doors to a retest of recent highs near 1.1350.
The bearish case, however, would strengthen if the pair finds acceptance below Tuesday's low of 1.1181, which could happen if the US Federal Reserve sounds less dovish-than-expected later today. The central bank is widely expected to lat the groundwork for a rate cut later this year.
Trend: Bullish above 1.1247
This article is published only for general use basic informatory purposes and should not be considered or depended on as a financial or investment advice. Investors should make sure that they understand the risks and seek independent financial advice at all times. CFDS ARE COMPLEX INSTRUMENTS AND COME WITH A HIGH RISK OF LOSING MONEY RAPIDLY DUE TO LEVERAGE.