EUR/USD Rising Wedge Suggests a Reversal Is In the Cards

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Written By: Mircea Vasiu
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    Summary:
  • EUR/USD rising wedge spells troubles for bulls. The pair looks weak above 1.21 and the focus now shifts to 1.20 for the end of the trading month.

The EUR/USD pair had a terrific month in April. It rose from 1.17 to over 1.21 on the back of relentless dollar weakness, but also on the back of a strong euro.

Europe finally got its act together, and the vaccination effort increased significantly in the last weeks. We may say that Europe’s problem during the first quarter was mainly due to the lack of vaccines and not to the inability to administer them.

All that remained behind in April, and the euro gained across the board, in particular against the dollar. The Fed and the ECB did not help either, in the sense that the Fed remained accommodative despite a strong economic outlook, while the ECB kept sending hawkish signals throughout the month despite the need for more easing.

All in all, the euro rose for good reasons, but bulls should be cautious here. The pair formed a rising wedge above 1.20, and the danger is that it will break the lower trendline.

EUR/USD Technical Analysis

A wedge like the one below forms during complex corrections. More precisely, the pair may have formed a double combination and the wedge suggests a full retracement possible.

Bears may want to wait for the EUR/USD pair to close below the lower trendline before going short with a stop at the highs and a take profit at minimum half the distance of the entire wedge pattern.

EUR/USD Price Forecast

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Written By: Mircea Vasiu

Mircea, MBA in International Business graduating Magna Cum Laudae, trades for a living and contributes to various financial publications for more than six years. He writes about macroeconomics, stock indices, currencies, and most recently ETFs and individual stocks. For the past decade, he’s involved in everything trading related, mostly in the currency market, both with manual and algorithmic trading.

Published by
Written By: Mircea Vasiu