Chart of the day EURUSD bullish breakout from Descending Wedge

Short-term technical outlook on EUR/USD

Key technical elements

• The recent short-term downtrend from its 08 September 2017 high of 1.2092 is now showing signs of bearish exhaustion where a potential bullish reversal in price action may occur.
• Last Friday (06 Oct), post NFP’s price action has formed a bullish “Hammer” candlestick pattern on its medium-term support zone of 1.1714/1.1670 coupled with a minor bullish “Descending Wedge” configuration seem in the shorter-term time frame (1 hour) from the 29 September 2017 minor swing high of 1.1830 (see daily & hourly charts).
• In today (10 Oct) Asian session, the EUR/USD has staged a bullish breakout from the upper boundary of the aforementioned “Descending Wedge” now turns pull-back support at 1.1730.
• The hourly RSI oscillator has continued to inch upwards from its corresponding support at the 48% level. In addition, it still has further potential room to manoeuvre to the upside before it reaches an extreme overbought level of 82% in place since 07 September 2017. These observations suggest that short-term upside momentum of price action remains intact.
• The next significant short-term resistances stand at 1.1830 (29 Sep 2017 minor swing high & 38.2% Fibonacci retracement of the decline from 08 Sep 2017 high to 06 Oct 2017 low) follow by 1.1860/1875 (the former swing lows of 05/21 Sep 2017, the descending trendline from 08 Sep 2017 high & the 50% Fibonacci retracement of the decline from 08 Sep 2017 high to 06 Oct 2017 low).

Key levels (1 to 3 days)

Intermediate support: 1.1750

Pivot (key support): 1.1730

Resistances: 1.1830 & 1.1860/1875

Next support: 1.1670 (medium-term)

Conclusion

Therefore, as long as the 1.1730 key short-term pivotal support holds, the EUR/USD may see a further potential recovery at least in the short-term towards the intermediate resistance of 1.1830 and a break above it is likely to open up scope for a further bullish upleg to target the next resistance at 1.1860/1875.

However, failure to hold above 1.1750 shall be deemed as a failure bullish breakout and a choppy decline is likely to unfold to retest the lower limit of the medium-term support at 1.1670.

Charts are from eSignal

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