EURUSD Meets a Crucial Long-term Support. What’s next?EURUSD is doing pretty terrible in the past few days.
A quick look at the charts and you can see that the last six trading days were all bearish. The last time it happened at the end of September and the beginning of October 2018. That time, 6 was enough and after that, the rice made a small bullish correction. History can repeat itself now and we have one strong reason to think that.
The bullish window comes from the fact, that the price is currently reaching a very important technical place. This place is a lower line of the long-term symmetric triangle pattern (purple). The asymmetric triangle is being formed here since September 2018 and is causing the overall volatility to drop. Triangles are very good and reliable patterns to trade but not when the price is still inside. What trend followers love to do is to wait for the price to break from this formation and they trade in the direction of the breakout. This is a very common price action technique used by thousands of traders.
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As we mentioned, currently EURUSD is on the lower line of this pattern. The price can either bounce or break that line. What price action enthusiast do at this moment is they wait. Any bullish candlestick on that line like a hammer or engulfing will be a signal to buy. On the other hand, the price closing a day below the lower line of the triangle will be a strong signal to do the opposite and sell.
This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis