Despite last week’s closing price reversal bottom, the EUR USD is still in a downtrend, and if there is no follow-through to the upside then the downtrend will remain intact. With the first step in the bottoming process out of the way, bullish traders are waiting for the key second step. This is the follow-through to the upside through last week’s high at 1.2389. A move through this price will confirm the reversal.
Last week’s action created a short-term range at 1.2747 to 1.2042. It also created a key retracement zone at 1.2394 to 1.2478. The lower or 50% price level stopped the rally at 1.2389. An even shorter-term range has been created between 1.2042 and 1.2389. This range suggests a near-term pull-back to 1.2216 – 1.2175 is likely this week.
Weekly EUR USD Pattern, Price & Time Analysis
Besides the retracement zones, traders should pay attention to the series of downtrending Gann angles. The first one from the 1.4940 top is at 1.2340 this week. The second from 1.2747 drops in at 1.2507. Finally a third Gann angle is at 1.2647. It looks complicated but what these angles are suggesting is that it is going to take time to form a proper bottom.
Technically, spike or “V” bottoms usually lead to fast short-covering rallies, but not changes in trend. Just take a look at this long-term weekly chart. The first sign that the Euro is getting ready to rally for a prolonged period of time will be the formation of a support base. As long as we continue to see lower-tops and lower-bottoms on the weekly chart then traders should look for further downside action. If this current bottoming action fails then 1.1876 is the next likely downside target.
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