Since the end of September 2022, the euro-US dollar pair has been moving in an uptrend, which is basically a correction of the declines the pair has experienced over 20 months. The declines were initiated in January 2020 at 1.2350 and lasted until September, when the EURUSD pair fell below parity at 0.9530. If we measure the extent of the correction currently underway, it has so far reached around 50% of the previous downward wave.
EURUSD – will the bullish engulfing strengthen the Euro?
A bullish engulfing pattern appeared on the daily chart today, with the upside daily candle engulfing Friday’s candle. At the time of writing this analysis, the price is still within the formation. Based on the assumptions of the PA+MACD strategy – we should wait until the breakout from this formation and look for confirmation on the MACD oscillator whether this breakout will continue. Currently, the MACD is downward and only overcoming the level of 1.0620 can change the direction to upward (green).
On the H4 chart the MACD is already rising
On the H4 chart we note that the price has today bounced off the trendline (blue), which together with the bullish engulfing formation maximum is a confluence of resistance. Only overcoming 1.0620 can be a good signal to take a long position (Buy). The MACD is already rising and forms an upward divergence with the chart. The probability of an upward breakout is high, but we cannot exclude an attempt to break out from the bottom, test the demand zone ( beige) located at 1.0505 and only then continue the growth.
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