EUR/USD technical analysis: Off 3-week lows, 4H chart shows falling wedge pattern
- EUR/USD's 4-hour chart is reporting a falling wedge pattern.
- A wedge breakout looks likely with bullish RSI divergence.
EUR/USD is currently trading at 1.1203, having hit a low of 1.1193 in the overnight trade – a level last seen on June 19.
Notably, the recent drop from 1.1412 has taken the shape of a falling wedge pattern on the 4-hour chart. A falling wedge comprises of trendlines connecting lower highs and lower lows in contracting range – a sign of bears losing stream.
As a result, a breakout is often followed by a rally. In EUR/USD's case, a move above the upper edge of the falling wedge, currently at 1.1217, would confirm a breakout and open the doors to a retest of 1.1264 (4H 200-candle moving average).
A breakout looks likely as the 4-hour chart relative strength index (RSI) has created a bullish divergence. The prospects of wedge breakout, however, would weaken if the pair finds acceptance below 1.1193, invalidating the bullish divergence of the RSI.
4-hour chart
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Trend: Bullish above 1.1217
Pivot points
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
