EUR/USD - Updated Chart, Continuation After Retest

Posted by John Kelvin on Oct 17, 2019 8:59:37 AM

After consolidating for 109 days inside a descending channel, price has finally broken out and retested the channel. This signals a continuation in price to the upside.

On the daily chart of EURUSD, the price maintained its levels of resistance and support inside the down-sloping trendline (support and resistance).

The descending channel can act as a bearish continuation pattern or a bullish reversal pattern; it all depends on the possible breakout.

A descending channel consists of two parallel lines that are equal distance apart and they both surround the price action. A breakout to the upside means there is a possible shift from a bearish sentiment to bullish. It's recommended that buying into this break should occur after multiple tests of the upper channel line. The reason being, breakouts early on in the channel often lead to traps, as shorts push the price back down to the lower end of the channel. It has a 60% chance of retesting the resistance it broke out from, turning it into a new support.

EURUSD CHANNEL

The height of the channel is used to measure the take profit targets. Technical anaylsis suggests a potential target from $1.11453 up to $1.13891.

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