EURUSD – pair over a year is in an uptrend. Today, it set a maximum of this year at 1.2325, but at the end of the day the price fell to 1.2180. The daily candle has engulfed two previous – Monday’s and Tuesday’s candles. The Bearish Engulfing Bar formation was created.
If the market confirms the downward bias, which is very likely, because such a formation is often a signal of a trend change, the first target may be the blue zone at the level of the previous maximum 1.2090-80. Here we can expect a correction and return of the price to 1.2180 (the bottom edge of the rectangle on the chart).
In addition, the maximum of the daily candle and almost the entire top wick are above the Bollinger Band which further strengthens the bearish attitude. For a more detailed description of the Price Action – Engulfing Bar or also often referred to as Outside Bar, see: Price Action Formation – Bearish Engulfing