EURUSD meets a crucial long-term support. What’s next?

Alpari Market Review
Alpari Market Review

EURUSD has been doing pretty terribly over the past few days. A quick look on the charts will tell you that the last six trading days have all been bearish. The last time this happened was at the end of September and the beginning of October, 2018. Back then, 6 days was enough and the pair went on to make a small bullish correction. History can repeat itself now and we have one strong reason for believing that it will.

The bullish window comes from the fact that the pair is currently approaching a very important technical level. This is the lower line of the long-term symmetrical triangle pattern (purple). The symmetrical triangle has been forming here since September 2018, and is causing the overall volatility to drop. Triangles are very good and reliable patterns to trade, but not when the price is still inside. What trend followers love to do is to wait for the price to break from this formation and they trade in the direction of the breakout. This is a very common price action technique used by thousands of traders.

As we’ve mentioned, EURUSD is currently on the lower line of this pattern. The price can either bounce or break that line. What price action enthusiasts do at times like these is wait. Any bullish candlestick on that line, like a hammer or engulfing, will be a signal to buy. On the other hand, the price closing the day below the lower line of the triangle will be a strong signal to do the opposite and sell.

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