EUR/USD Weekly Chart Breakdown – Rising Wedge Reversal at Major Resistance | Targeting 1.04820
🧭 Market Context: EUR/USD Macro & Structure Overview
EUR/USD has experienced a strong bullish corrective wave since reaching lows near 1.04820 in 2022. This rally was structured within a Rising Wedge, suggesting that the bullish move was losing momentum over time. Rising wedges are often considered “traps” for late buyers in an uptrend. These patterns can appear bullish but are structurally bearish once they break support.
As of now, the price has reacted sharply from a confluence zone, including:
Historical resistance (2020–2021 highs)
Top of the wedge pattern
A round number psychological area around 1.1400–1.1600
This rejection and subsequent breakdown of the wedge marks the end of the bullish phase and the start of a potential larger bearish cycle.
📊 Technical Pattern Breakdown – Rising Wedge Formation
🔹 Pattern Definition:
A Rising Wedge is a bearish reversal pattern formed by converging upward-sloping trendlines. It typically represents slowing bullish momentum with weakening higher highs and lows.
🔍 Key Structural Highlights:
Support Line: Upward sloping and tested multiple times, now broken.
Resistance Line: Also sloped upward, acting as a compression ceiling for price.
False Breakout Avoided: Price respected the upper wedge resistance and did not break out—suggesting strong seller control.
Volume Insight: While not shown, typically wedges see declining volume until the breakout.
This is a mature wedge, and the current bearish rejection confirms a technical breakdown from the structure.
🔎 Horizontal Key Zones
🟣 Resistance Zone:
1.1400–1.1600: This area has historically been a strong ceiling for price, with multiple failed breakout attempts over the years.
🟣 Support Zones:
1.10692 (TP1): Recent minor structure and consolidation area.
1.04820 (TP2): Major weekly support and historical demand level dating back to 2020.
💭 Price Action Psychology
Understanding what the candles represent is essential:
The wedge shows gradual exhaustion of bullish pressure.
Break of structure triggers institutional and retail selling.
Early longs are now trapped; profit-taking and stop-loss hits accelerate the decline.
Post-breakout retest (as seen) is a classic move, where broken support becomes new resistance—also a prime entry point for short sellers.
Traders looking for short setups will favor this level for high-probability entries.
🛠️ Trade Setup Strategy
🔻 Bearish Setup Summary:
Component Detail
Pattern Rising Wedge (Bearish Reversal)
Trend Potential Reversal to Downtrend
Bias Bearish
Entry Zone ~1.13500–1.14000 (Post-retest)
TP1 1.10692 – First structural support
TP2 1.04820 – Major weekly support
SL 1.22491 – Above wedge top and invalidation
R:R Favorable: Minimum 2.5:1 to 3:1
✅ Entry Triggers:
Bearish engulfing candle
Rejection wick + high volume
Lower timeframe breakdown (4H or Daily) from consolidation near resistance
⏳ Timeframe & Trade Horizon
Timeframe: Weekly chart – this is a medium- to long-term trade.
Horizon: Weeks to months (2–4+ months), depending on macro drivers like ECB/Fed policy shifts or U.S. economic data.
🧠 Trade Management Tips
Scale Out: Consider partial profit booking at TP1 (1.1069) and move stop to breakeven.
Re-entry Zones: If price pulls back and forms another consolidation below resistance, additional entries could be considered.
Invalidation Point: Any weekly close above 1.2249 would invalidate the wedge breakdown thesis.
🔍 Multi-Timeframe Consideration
Daily: Watch for clean lower-high structure formation and bearish continuation patterns like bear flags or pennants.
4H: Short-term confirmation via breakdowns and rejection of intraday resistance zones.
Monthly: Price still within macro consolidation but showing weakness at key resistance. This move could be the start of a macro leg down.
💬 Final Thoughts
This chart represents an excellent example of a high-probability reversal setup using classic price action and technical structure. The Rising Wedge pattern is textbook, the breakdown is confirmed, and the risk-reward is highly favorable.
If macro fundamentals align (e.g., USD strength or ECB dovishness), this setup could unfold as a long-term trend reversal, offering strong opportunities for swing and position traders.
Always combine technical setups with disciplined risk management and confirmation tools before entry.
🧭 Market Context: EUR/USD Macro & Structure Overview
EUR/USD has experienced a strong bullish corrective wave since reaching lows near 1.04820 in 2022. This rally was structured within a Rising Wedge, suggesting that the bullish move was losing momentum over time. Rising wedges are often considered “traps” for late buyers in an uptrend. These patterns can appear bullish but are structurally bearish once they break support.
As of now, the price has reacted sharply from a confluence zone, including:
Historical resistance (2020–2021 highs)
Top of the wedge pattern
A round number psychological area around 1.1400–1.1600
This rejection and subsequent breakdown of the wedge marks the end of the bullish phase and the start of a potential larger bearish cycle.
📊 Technical Pattern Breakdown – Rising Wedge Formation
🔹 Pattern Definition:
A Rising Wedge is a bearish reversal pattern formed by converging upward-sloping trendlines. It typically represents slowing bullish momentum with weakening higher highs and lows.
🔍 Key Structural Highlights:
Support Line: Upward sloping and tested multiple times, now broken.
Resistance Line: Also sloped upward, acting as a compression ceiling for price.
False Breakout Avoided: Price respected the upper wedge resistance and did not break out—suggesting strong seller control.
Volume Insight: While not shown, typically wedges see declining volume until the breakout.
This is a mature wedge, and the current bearish rejection confirms a technical breakdown from the structure.
🔎 Horizontal Key Zones
🟣 Resistance Zone:
1.1400–1.1600: This area has historically been a strong ceiling for price, with multiple failed breakout attempts over the years.
🟣 Support Zones:
1.10692 (TP1): Recent minor structure and consolidation area.
1.04820 (TP2): Major weekly support and historical demand level dating back to 2020.
💭 Price Action Psychology
Understanding what the candles represent is essential:
The wedge shows gradual exhaustion of bullish pressure.
Break of structure triggers institutional and retail selling.
Early longs are now trapped; profit-taking and stop-loss hits accelerate the decline.
Post-breakout retest (as seen) is a classic move, where broken support becomes new resistance—also a prime entry point for short sellers.
Traders looking for short setups will favor this level for high-probability entries.
🛠️ Trade Setup Strategy
🔻 Bearish Setup Summary:
Component Detail
Pattern Rising Wedge (Bearish Reversal)
Trend Potential Reversal to Downtrend
Bias Bearish
Entry Zone ~1.13500–1.14000 (Post-retest)
TP1 1.10692 – First structural support
TP2 1.04820 – Major weekly support
SL 1.22491 – Above wedge top and invalidation
R:R Favorable: Minimum 2.5:1 to 3:1
✅ Entry Triggers:
Bearish engulfing candle
Rejection wick + high volume
Lower timeframe breakdown (4H or Daily) from consolidation near resistance
⏳ Timeframe & Trade Horizon
Timeframe: Weekly chart – this is a medium- to long-term trade.
Horizon: Weeks to months (2–4+ months), depending on macro drivers like ECB/Fed policy shifts or U.S. economic data.
🧠 Trade Management Tips
Scale Out: Consider partial profit booking at TP1 (1.1069) and move stop to breakeven.
Re-entry Zones: If price pulls back and forms another consolidation below resistance, additional entries could be considered.
Invalidation Point: Any weekly close above 1.2249 would invalidate the wedge breakdown thesis.
🔍 Multi-Timeframe Consideration
Daily: Watch for clean lower-high structure formation and bearish continuation patterns like bear flags or pennants.
4H: Short-term confirmation via breakdowns and rejection of intraday resistance zones.
Monthly: Price still within macro consolidation but showing weakness at key resistance. This move could be the start of a macro leg down.
💬 Final Thoughts
This chart represents an excellent example of a high-probability reversal setup using classic price action and technical structure. The Rising Wedge pattern is textbook, the breakdown is confirmed, and the risk-reward is highly favorable.
If macro fundamentals align (e.g., USD strength or ECB dovishness), this setup could unfold as a long-term trend reversal, offering strong opportunities for swing and position traders.
Always combine technical setups with disciplined risk management and confirmation tools before entry.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.