- EUR/USD bulls moving in at the lows for the day.
- Bulls have an eye on the weekly M-formation and prospects of a significant correction.
EUR/USD is set to close off a bearish week towards a test of 1.11 the figure after breaking out of the bearish weekly wedge to the downside. The following illustrates the potential for a downside continuation on the lower time frames while keeping note of the potential for a significant correction to the upside medium term.
EUR/USD weekly chart
The weekly chart has imprinted an M-formation. This is a reversion pattern and could be a significant theme for the technical outlook in the medium term. The 38.2% Fibonacci retracement level has a confluence with the prior lows that would be expected to at together as a firm resistance structure. Meanwhile, there is still room for a run to test 1.11 the figure, however.
EUR/USD H1 chart
The price has left a bottoming formation given the wicks and subsequent upside correction. The irregularity of the price action is also bullish.
However, we have seen more commitments from the bears since the lows which leave prospects of a downside continuaiton towards 1.11 the figure for the sessions ahead. With that being said, the combination of month-end flows and the choppy price action, the risk-reward is hardly attractive at this stage of the bearish flow.
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