The EURUSD pair at the beginning of January reached the level of 1.2350, establishing almost a 3-year maximum. From this level, the price steadily declined to reach the round level of 1.2000 today.

  • bullish engulfment at strong support
  • upward divergence on MACD
  • attention! – payrolls – Friday 14:30
eurusd - a bullish engulfing pattern
EURUSD H4 – bullish engulfing pattern

On the H4 chart an upward outside bar formed a bullish engulfing pattern. The minimum of the candle forming the formation – commonly called the “mother” candle – is located at the above mentioned level, which is also a strong support and resistance level (S/R).

The appearance of the formation is accompanied by the establishment of the minimum on the MACD, the oscillator begins to rise, which may be a signal for the correction of the recent declines, especially since the upward divergence appeared.

eurusd h1
EURUSD H1 – upward divergence

On the H1 chart we also have an upward divergence, which increases the probability of an upward breakout from the formation (marked with a red rectangle).

To sum up, the following factors support the upward scenario:
– bullish engulfment at the strong S/R level
– upward divergence on H4
– upward divergence on H1

Only permanent defeat of 1.20 may negate the upward scenario. It is important to remember about an important macro event that may have a large impact on the price of the analyzed pair, which will be Friday’s payrolls. Today’s employment data from ADP were very good – instead of the expected 49 thousand, 174 thousand were reported.

ongoing analysis

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