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?

euro us dollar chart February
EURUSD Daily – bullish engulfing of the demand zone could give a boost to the upside

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

bullish engulfing pattern euro dollar
EURUSD H4 – here the MACD is already upwards, but the bullish engulfing formation is still some way away from being broken out.

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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The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions which you can attend from Monday to Friday.
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