EURUSD H1 02/12/2024 - SELL below 1.04850 OR BUY above 1.05750
Overview of EUR/USD Price Action
The EUR/USD pair is trading in a consolidation zone between 1.04950 (support) and 1.05250 (resistance), as seen on the H1 chart.
Momentum indicators like the RSI (currently around 30-40 on H1) and Stochastic Oscillator suggest that the pair is oversold but lacks a clear directional trend.
The MACD shows bearish momentum weakening, indicating potential for a reversal if resistance is broken, while the Average True Range (ATR) indicates low volatility.
This creates the perfect scenario for breakout trades in both directions, depending on whether the market breaches the consolidation zone.
Buy Stop Setup: Bullish Breakout Case
Resistance Level at 1.05250: This zone has acted as a ceiling for the pair during the consolidation phase. A break above this level signals renewed buying pressure.
Entry Level: Placing the Buy Stop at 1.05300, slightly above the resistance, ensures confirmation of a bullish breakout.
Take-Profit Target: The next key level is around 1.05750, derived from:
The previous monthly high at 1.05790.
Fibonacci 61.8% retracement of the previous bearish leg.
Stop-Loss: Setting it at 1.05100, just below the breakout point, protects against false breakouts.
Rationale for a Buy Trade:
A breach above 1.05250 will invalidate the current bearish trend on H1 and confirm short-term bullish momentum.
This move aligns with possible USD weakness in the upcoming sessions due to softening fundamentals (e.g., dovish Fed sentiment or weaker US data, if relevant).
Sell Stop Setup: Bearish Breakout Case
Support Level at 1.04950: This level has provided solid support for the pair recently. A breakdown below this level signals bearish continuation.
Entry Level: Placing the Sell Stop at 1.04850, slightly below support, ensures entry only after confirmation of bearish pressure.
Take-Profit Target: The next target is around 1.04450, derived from:
Fibonacci 161.8% extension of the recent correction.
Psychological round number support at 1.04500.
Stop-Loss: Setting it at 1.05050, just above the breakout level, limits risk exposure from potential pullbacks.
Rationale for a Sell Trade:
A breakdown below 1.04950 signals bearish continuation, possibly targeting the lows seen earlier in November.
This move aligns with recent USD strength and market sentiment favoring safe-haven currencies.
Technical Indicators Supporting the Setup
RSI: On both M30 and H1 timeframes, the RSI hovers near oversold levels, showing a lack of momentum but creating potential for a breakout in either direction.
Stochastic Oscillator: Shows the market is at extremes, either overbought or oversold, adding further credence to the possibility of a directional move.
MACD Divergence: The MACD histogram on H1 is attempting to flatten, suggesting the bearish momentum is waning and that price could either consolidate further or reverse to the upside.
Ichimoku Cloud: The H1 chart shows price is trading below the cloud, indicating a bearish bias. However, price action is close to breaking out, supporting both trade scenarios.
Market Sentiment & Fundamental Factors
Dollar Index (DXY): A closely watched driver of EUR/USD, the DXY has been showing signs of indecision in recent sessions. Any weakening of the dollar could trigger the bullish breakout, while dollar strength supports the bearish case.
The EUR/USD pair is trading in a consolidation zone between 1.04950 (support) and 1.05250 (resistance), as seen on the H1 chart.
Momentum indicators like the RSI (currently around 30-40 on H1) and Stochastic Oscillator suggest that the pair is oversold but lacks a clear directional trend.
The MACD shows bearish momentum weakening, indicating potential for a reversal if resistance is broken, while the Average True Range (ATR) indicates low volatility.
This creates the perfect scenario for breakout trades in both directions, depending on whether the market breaches the consolidation zone.
Buy Stop Setup: Bullish Breakout Case
Resistance Level at 1.05250: This zone has acted as a ceiling for the pair during the consolidation phase. A break above this level signals renewed buying pressure.
Entry Level: Placing the Buy Stop at 1.05300, slightly above the resistance, ensures confirmation of a bullish breakout.
Take-Profit Target: The next key level is around 1.05750, derived from:
The previous monthly high at 1.05790.
Fibonacci 61.8% retracement of the previous bearish leg.
Stop-Loss: Setting it at 1.05100, just below the breakout point, protects against false breakouts.
Rationale for a Buy Trade:
A breach above 1.05250 will invalidate the current bearish trend on H1 and confirm short-term bullish momentum.
This move aligns with possible USD weakness in the upcoming sessions due to softening fundamentals (e.g., dovish Fed sentiment or weaker US data, if relevant).
Sell Stop Setup: Bearish Breakout Case
Support Level at 1.04950: This level has provided solid support for the pair recently. A breakdown below this level signals bearish continuation.
Entry Level: Placing the Sell Stop at 1.04850, slightly below support, ensures entry only after confirmation of bearish pressure.
Take-Profit Target: The next target is around 1.04450, derived from:
Fibonacci 161.8% extension of the recent correction.
Psychological round number support at 1.04500.
Stop-Loss: Setting it at 1.05050, just above the breakout level, limits risk exposure from potential pullbacks.
Rationale for a Sell Trade:
A breakdown below 1.04950 signals bearish continuation, possibly targeting the lows seen earlier in November.
This move aligns with recent USD strength and market sentiment favoring safe-haven currencies.
Technical Indicators Supporting the Setup
RSI: On both M30 and H1 timeframes, the RSI hovers near oversold levels, showing a lack of momentum but creating potential for a breakout in either direction.
Stochastic Oscillator: Shows the market is at extremes, either overbought or oversold, adding further credence to the possibility of a directional move.
MACD Divergence: The MACD histogram on H1 is attempting to flatten, suggesting the bearish momentum is waning and that price could either consolidate further or reverse to the upside.
Ichimoku Cloud: The H1 chart shows price is trading below the cloud, indicating a bearish bias. However, price action is close to breaking out, supporting both trade scenarios.
Market Sentiment & Fundamental Factors
Dollar Index (DXY): A closely watched driver of EUR/USD, the DXY has been showing signs of indecision in recent sessions. Any weakening of the dollar could trigger the bullish breakout, while dollar strength supports the bearish case.
Note
BUY order executed, but hit the S/LNote
SELL order executed, but hit the S/L
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