EUR/USD Weekly Forecast: Rising Wedge Breakdown & Bearish TargetChart Overview:
The provided EUR/USD daily chart displays a well-structured Rising Wedge pattern, which eventually led to a significant bearish breakdown. The analysis highlights key levels, including resistance, support, stop loss, and a downside target, all of which contribute to a well-planned trade setup. The market structure suggests a strong bearish continuation, targeting lower price levels based on technical projections.
1. Chart Pattern: Rising Wedge Formation & Breakdown
A Rising Wedge is a bearish reversal pattern that forms when price creates higher highs and higher lows, but the slope of the trendlines indicates weakening bullish momentum. This pattern is often a signal of upcoming bearish price action once a breakout occurs.
Pattern Breakdown Analysis:
The price moved inside the wedge, showing a gradual upward trend with declining momentum.
Upon reaching a key resistance level, price faced strong rejection (marked with a red circle).
The bearish breakdown below the wedge confirmed the pattern, leading to a sharp decline.
A retest of the broken wedge followed before continuing downward.
This confirms a classic bearish trend reversal, making it a strong technical setup.
2. Key Levels and Trade Setup:
🔹 Resistance Level (Major Supply Zone)
The resistance zone (highlighted in beige) acted as a strong supply area, where buyers lost control.
Price reached this resistance multiple times but failed to sustain above it.
A bearish reversal initiated from this level, marking the beginning of a downward trend.
🔹 Support Level (Key Demand Zone)
The support zone (also highlighted) represents a major demand area where price previously reversed.
This level aligns with historical price action, making it a critical area to monitor for potential reactions.
🔹 Stop Loss Placement
A stop loss is placed above the previous high within the resistance zone to protect against false breakouts.
If price invalidates the breakdown and moves above this level, the bearish setup would no longer be valid.
🔹 Price Target Projection
The breakdown suggests a potential drop towards 1.00874, as indicated by the 100% measured move.
This aligns with previous historical support, making it a realistic downside target.
3. Trade Execution Plan: How to Trade This Setup?
📌 Entry Strategy:
Traders can enter short after confirmation of the breakdown and a potential retest.
A sell position can be initiated around the resistance turned support after a pullback rejection.
📌 Stop Loss Strategy:
A stop loss should be set above the resistance zone (around 1.12208) to minimize risk.
This ensures protection against a bullish breakout invalidation.
📌 Take Profit Strategy:
The first take profit target is set at the support level near 1.04498.
The final take profit target is at 1.00874, which aligns with the full measured move projection.
4. Conclusion & Market Sentiment
🔸 Bearish Market Bias – The breakdown of the rising wedge confirms strong bearish momentum.
🔸 Key Resistance Held Strong – The price was unable to break above, confirming seller dominance.
🔸 Downside Target Aligns with Previous Support Levels – A confluence of technical signals supports further decline.
Final Thought:
This chart presents a high-probability bearish trade setup in EUR/USD. The combination of a rising wedge breakdown, clear resistance rejection, and a defined downside target makes it an ideal short-selling opportunity. Traders should watch for price action confirmations and risk management strategies before executing trades.
🚨 Risk Disclaimer: Always apply proper risk management and confirm signals before trading. Market conditions may change, so monitoring price behavior is crucial for trade adjustments.
