Forex Strategy: EUR/USD Runs On 1.3800 Post Bullish Reversal Signal
- EUR/USD Technical Strategy: Longs Preferred
- Confirmation of Hammer formation offers bullish reversal signal
- Evening Star pattern on the weekly chart offers conflicting message
A Hammer candlestick pattern on the daily chart has emerged for EUR/USD following a bounce off key support at 1.3700. The bullish reversal signal has received confirmation from a second successive up-day and suggests a potential advance towards resistance at the 1.3840 mark.
EUR/USD: Hammer Receives Confirmation
Daily Chart - Created Using FXCM Marketscope 2.0
Drilling down to the four hour chart; the presence of a Dragonfly Doji near 1.3750 helped foreshadow the bounce towards 1.3805 in recent trading. A break above the notable resistance level coupled with the absence of a bearish reversal signal may open an advance towards 1.3840/50.
EUR/USD: 1.3800/5 In Focus During Intraday Trade
4 Hour Chart - Created Using FXCM Marketscope 2.0
Finally, taking a look at some broader context provided the weekly chart; the Evening Star formation that has emerged shy of the key 1.4000 is a notable warning signal of further declines ahead. The pattern has received confirmation from a successive down week which raises the likelihood of an eventual correction towards the 1.3480 support level.
EUR/USD: Evening Star Receives Confirmation
Weekly Chart - Created Using FXCM Marketscope 2.0
By David de Ferranti, Market Analyst, FXCM
Follow David on Twitter: @Davidde
To receive David’s analysis directly via email, please sign up here.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.