EUR/USD Forecast: Wait For A Breakout
2022.05.08 09:11
In our previous forecast, we discussed EUR/USD price retracing to $1.06736—which it did—but only to $1.06410. It was close to the first target, but there was selling pressure on the upper side that was preventing a further rise.
Looking at the candles that were formed during the week, we can see that the first two candles—Monday and Tuesday—were inside the previous week’s Friday candle.
That was the signal price had some issues moving in any direction. On Wednesday, we had a large bullish candle that broke outside this small range and closed the day above the $1.05825 resistance line, a signal that buyers were stronger enabling possible higher price action.
But, Thursday brought with it a strong bearish candle that closed the day back inside a small range. And Friday was an indecision candle that confirmed one thing: we need to wait for a breakout.
EUR/USD Chart
On the chart, Friday’s candle reached lower levels than those previous and at higher levels. That signaled that the market was testing the price around this small range.
For the coming week, we need to wait for the price to break out of this range. I am more inclined to see the price at higher levels because of the price action on the chart.
EUR/USD closed on Friday at higher levels than most candles this past week.
Plus, on the upper side, we had more wicks than on the bottom which meant pressure was coming from the down side, pushing the price to higher levels.
$1.05825 is the first target for the bulls that must be broken and retested to verify the breakout which means $1.06736 and $1.07388 are the targets discussed in our previous EUR/USD forecast.
Below we have $1.05087 as the support that is maintaining the price from a move down. We need a breakout below this support to see the price reach $1.03920.
For now, the smart move is to wait to see at which level the price will clear, indicating its path for the future move.
