EUR/USD (30-Minute Chart) — Rectangle Breakout and Bullish Continuation Setup
1. Market Background and Bigger Picture Context:
The EUR/USD pair has been moving in a sideways consolidation for several sessions, forming a Rectangle Range between the clear horizontal levels of support and resistance.
This type of price action reflects market indecision, where neither bulls nor bears had full control — instead, price oscillated within a contained zone.
In broader terms, the rectangle pattern can often act as a continuation pattern, especially when formed after a previous uptrend, which suggests the breakout is more likely to occur in the direction of the prevailing trend (bullish bias).
🛠 Key Observations:
Consolidation typically precedes expansion — energy builds before a strong move.
Multiple touches on both support and resistance confirm the structure’s validity.
Higher lows within the rectangle hint that bulls were gradually gaining strength even before the breakout.
2. Technical Pattern Breakdown:
📌 Rectangle Formation:
Support Zone: 1.13290 – 1.13400
Resistance Zone: 1.13850 – 1.13950
Multiple tests (highlighted by orange circles) on both the top and bottom boundaries indicate market participants respecting these levels.
📌 Breakout Analysis:
The breakout occurred decisively with strong bullish momentum.
There was no immediate rejection from the resistance zone, which increases the breakout’s reliability.
The price is currently performing a textbook retest — previous resistance acting as new support (known as the "break and retest" concept).
3. Trade Plan and Setup Details:
🔵 Entry Strategy:
Wait for the price to show bullish confirmation above the retested resistance (now new support).
Look for bullish engulfing candles, strong wicks rejecting the new support, or break of minor local highs as entry triggers.
🎯 Target Projection:
TP1: 1.14088 — a safe initial take-profit based on a nearby micro-resistance.
TP2 (Final Target): 1.14500 — derived using the measured move technique (height of rectangle added to breakout point).
🔴 Stop Loss (Risk Control):
SL Placement: Below 1.13290 to allow room for market noise but protect capital if the setup fails.
This respects market structure while providing a good Risk-to-Reward ratio (around 1:2 or higher).
4. Risk-Reward Evaluation:
By entering around 1.13900, aiming for a final target near 1.14500, and placing a stop near 1.13290:
Risk: ~60 pips
Reward: ~150+ pips
RRR (Risk Reward Ratio): Approx. 1:2.5
This kind of setup is ideal for professional traders, who prioritize quality trades over quantity.
5. Market Psychology Behind the Setup:
The rectangle represents a "battlefield" where buyers and sellers are evenly matched.
The breakout shows buyers finally overwhelming sellers, suggesting a shift in control.
Retests allow fresh buyers to enter, further fueling the continuation.
Psychological Triggers:
Fear of missing out (FOMO) can cause late buyers to push price further up post-breakout.
Breakout traders entering above resistance combined with trapped short sellers covering their positions can accelerate upward momentum.
6. Possible Risks to Monitor:
False Breakout Risk: If the retest fails and price falls back into the rectangle, the bullish setup invalidates.
Major News Events: EUR or USD news (interest rate decisions, inflation data) can spike volatility and disrupt technical setups.
General Risk Management: Never risk more than 1-2% of account equity on a single trade.
🔥 Final Professional Tip:
"Patience after breakout is key — let the market retest and confirm before pulling the trigger. Rushing into breakouts without retests often leads to fakeouts and losses."
1. Market Background and Bigger Picture Context:
The EUR/USD pair has been moving in a sideways consolidation for several sessions, forming a Rectangle Range between the clear horizontal levels of support and resistance.
This type of price action reflects market indecision, where neither bulls nor bears had full control — instead, price oscillated within a contained zone.
In broader terms, the rectangle pattern can often act as a continuation pattern, especially when formed after a previous uptrend, which suggests the breakout is more likely to occur in the direction of the prevailing trend (bullish bias).
🛠 Key Observations:
Consolidation typically precedes expansion — energy builds before a strong move.
Multiple touches on both support and resistance confirm the structure’s validity.
Higher lows within the rectangle hint that bulls were gradually gaining strength even before the breakout.
2. Technical Pattern Breakdown:
📌 Rectangle Formation:
Support Zone: 1.13290 – 1.13400
Resistance Zone: 1.13850 – 1.13950
Multiple tests (highlighted by orange circles) on both the top and bottom boundaries indicate market participants respecting these levels.
📌 Breakout Analysis:
The breakout occurred decisively with strong bullish momentum.
There was no immediate rejection from the resistance zone, which increases the breakout’s reliability.
The price is currently performing a textbook retest — previous resistance acting as new support (known as the "break and retest" concept).
3. Trade Plan and Setup Details:
🔵 Entry Strategy:
Wait for the price to show bullish confirmation above the retested resistance (now new support).
Look for bullish engulfing candles, strong wicks rejecting the new support, or break of minor local highs as entry triggers.
🎯 Target Projection:
TP1: 1.14088 — a safe initial take-profit based on a nearby micro-resistance.
TP2 (Final Target): 1.14500 — derived using the measured move technique (height of rectangle added to breakout point).
🔴 Stop Loss (Risk Control):
SL Placement: Below 1.13290 to allow room for market noise but protect capital if the setup fails.
This respects market structure while providing a good Risk-to-Reward ratio (around 1:2 or higher).
4. Risk-Reward Evaluation:
By entering around 1.13900, aiming for a final target near 1.14500, and placing a stop near 1.13290:
Risk: ~60 pips
Reward: ~150+ pips
RRR (Risk Reward Ratio): Approx. 1:2.5
This kind of setup is ideal for professional traders, who prioritize quality trades over quantity.
5. Market Psychology Behind the Setup:
The rectangle represents a "battlefield" where buyers and sellers are evenly matched.
The breakout shows buyers finally overwhelming sellers, suggesting a shift in control.
Retests allow fresh buyers to enter, further fueling the continuation.
Psychological Triggers:
Fear of missing out (FOMO) can cause late buyers to push price further up post-breakout.
Breakout traders entering above resistance combined with trapped short sellers covering their positions can accelerate upward momentum.
6. Possible Risks to Monitor:
False Breakout Risk: If the retest fails and price falls back into the rectangle, the bullish setup invalidates.
Major News Events: EUR or USD news (interest rate decisions, inflation data) can spike volatility and disrupt technical setups.
General Risk Management: Never risk more than 1-2% of account equity on a single trade.
🔥 Final Professional Tip:
"Patience after breakout is key — let the market retest and confirm before pulling the trigger. Rushing into breakouts without retests often leads to fakeouts and losses."
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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.