Market Analysis – EURUSD Conforms to an Inverted Cup and Handle Pattern to Go Lower
The bears employ an inverted cup and handle pattern to plunge EURUSD. The price started the year on a high around the 1.23460 key level, but the market soon employed a tweezers top candle pattern to plunge the price immediately. The market found succor at the 1.20470 support zone. Though EURUSD broke it once, it kept the market afloat till it finally fell on the 4th of March 2021.
The price passed the 1.19510 key level to fall to another very strong key level at 1.84500. Market Bulls tried to rally at this point but failed and fell to 1.7150. At this point, the market was crafted into an inverted cup and handle pattern, using the 1.18500 key level as the support line. The pattern took the market past all the resistance and just fell short of the year’s high at 1.23460. The market then began a decline and fell directly back to the support line at the 1.18500 key level. The handle of the pattern was also crafted between the support line and the 1.19510 resistance.
Having been crafted into an inverted cup and handle pattern, the market is set to go lower. The market is set to take advantage of the decreasing market volatility as indicated by the ATR (Average True Range) to go lower. The MACD (Moving Average Convergence Divergence) displays decreasing histogram bars to reflect the handle pull back. Its signal lines are currently below the zero line and about to cross each other to go lower.
EURUSD Key Zones
Resistance Zones: 1.20470, 1.19510
Support Zones: 1.18450, 1.17150
Market Expectations
At the handle of the inverted cup and handle pattern, the market tried once to break down the support line but was repelled. The market has gone up again but is being bounced back by the handle line towards the support line again for another trial.
The MACD on the 4-hour chart has bullish histogram bars at the peak. This is due to the initial failure of the market to break the support line. The market is on course for a second trial at the support line. The ATR generally shows an undulating line of volatility, but currently on the low. This will help prices fall lower.
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