EUR/USD 3H Analysis – Falling Wedge Breakout with Bullish Continuation Setup
This chart of EUR/USD on the 3-hour timeframe illustrates a classic Falling Wedge pattern, signaling a potential bullish reversal. The pattern is well-defined with clear structure, support/resistance levels, and momentum indicators aligning for a long setup.
🔹 Market Context & Structure:
EUR/USD experienced a significant bullish rally earlier in April, followed by a period of consolidation and correction. This corrective move took the shape of a Falling Wedge, which is typically a bullish continuation or reversal pattern, depending on context.
🔍 Technical Components Breakdown:
🟣 1. Falling Wedge Pattern:
The wedge formed after a peak around 1.1600, with price gradually compressing between a descending resistance and a relatively flat support.
Lower highs and lower lows within the wedge show weakening bearish momentum.
Volume typically contracts within a wedge, and while not shown, it's often accompanied by a volume surge at breakout.
🔵 2. Support & Resistance:
Support Zone: The lower bound of the wedge and horizontal support held firm at around 1.1200–1.1230, marked multiple times by price bounces (orange circles).
Resistance Zone: The upper bound of the wedge and a historical resistance level stands around 1.14475 (interim) and 1.15454 (final target), the last significant swing high.
🟢 3. Breakout Confirmation:
A strong bullish breakout from the wedge is observed.
Price pulls back for a retest of the breakout area, confirming buyer strength and providing a technical entry zone around 1.1320.
A bullish engulfing candle or continuation pattern at this level would be ideal for confirmation.
📈 Trade Setup Parameters:
Parameter Level Explanation
Entry Zone ~1.1320–1.1340 Post-retest of breakout
Take Profit 1 1.14475 Previous minor resistance, first target
Take Profit 2 1.15454 Key resistance and wedge projection target
Stop Loss 1.1125 Below support zone and wedge base
Risk/Reward ~1:2+ Excellent R:R ratio based on current setup
📊 Pattern Implication & Projection:
The height of the wedge (from support to resistance) is approximately 300 pips. Using the measured move technique, this height is projected upward from the breakout point to estimate the target zone around 1.1545 — in line with previous structure.
🧠 Strategic Insight:
The Falling Wedge indicates bear exhaustion, while the breakout signals bullish momentum return.
Retesting the breakout area offers a low-risk entry opportunity for traders waiting on confirmation.
A break above 1.14475 would reinforce bullish control and strengthen the push toward 1.1545.
✅ Conclusion:
This setup reflects a technically sound bullish breakout from a Falling Wedge pattern with:
Clearly defined entry, TP, and SL,
Favorable risk-to-reward ratio,
Confluence from price structure and market psychology.
Traders should watch for follow-through momentum and price action confirmation near entry zones to optimize execution.
This chart of EUR/USD on the 3-hour timeframe illustrates a classic Falling Wedge pattern, signaling a potential bullish reversal. The pattern is well-defined with clear structure, support/resistance levels, and momentum indicators aligning for a long setup.
🔹 Market Context & Structure:
EUR/USD experienced a significant bullish rally earlier in April, followed by a period of consolidation and correction. This corrective move took the shape of a Falling Wedge, which is typically a bullish continuation or reversal pattern, depending on context.
🔍 Technical Components Breakdown:
🟣 1. Falling Wedge Pattern:
The wedge formed after a peak around 1.1600, with price gradually compressing between a descending resistance and a relatively flat support.
Lower highs and lower lows within the wedge show weakening bearish momentum.
Volume typically contracts within a wedge, and while not shown, it's often accompanied by a volume surge at breakout.
🔵 2. Support & Resistance:
Support Zone: The lower bound of the wedge and horizontal support held firm at around 1.1200–1.1230, marked multiple times by price bounces (orange circles).
Resistance Zone: The upper bound of the wedge and a historical resistance level stands around 1.14475 (interim) and 1.15454 (final target), the last significant swing high.
🟢 3. Breakout Confirmation:
A strong bullish breakout from the wedge is observed.
Price pulls back for a retest of the breakout area, confirming buyer strength and providing a technical entry zone around 1.1320.
A bullish engulfing candle or continuation pattern at this level would be ideal for confirmation.
📈 Trade Setup Parameters:
Parameter Level Explanation
Entry Zone ~1.1320–1.1340 Post-retest of breakout
Take Profit 1 1.14475 Previous minor resistance, first target
Take Profit 2 1.15454 Key resistance and wedge projection target
Stop Loss 1.1125 Below support zone and wedge base
Risk/Reward ~1:2+ Excellent R:R ratio based on current setup
📊 Pattern Implication & Projection:
The height of the wedge (from support to resistance) is approximately 300 pips. Using the measured move technique, this height is projected upward from the breakout point to estimate the target zone around 1.1545 — in line with previous structure.
🧠 Strategic Insight:
The Falling Wedge indicates bear exhaustion, while the breakout signals bullish momentum return.
Retesting the breakout area offers a low-risk entry opportunity for traders waiting on confirmation.
A break above 1.14475 would reinforce bullish control and strengthen the push toward 1.1545.
✅ Conclusion:
This setup reflects a technically sound bullish breakout from a Falling Wedge pattern with:
Clearly defined entry, TP, and SL,
Favorable risk-to-reward ratio,
Confluence from price structure and market psychology.
Traders should watch for follow-through momentum and price action confirmation near entry zones to optimize execution.
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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.