Although many investors, traders and analysts are predicting that it is only a matter of time that the EUR/USD will begin to fall back into its Bearish trend, the daily chart has an almost text book perfect Ax or Hatchet formation that indicates it is getting ready to break higher. The pair is resting on the Monthly/Weekly Pivot level at 1.2560 and has leveled off its lows with descending highs. This is typically a Bullish Breakout pattern. If price does in fact turn Bullish, the 1.2660 level will be a key level to hold above. If prices close above 1.2660 the Ax will be broken and a run up to 1.2760 is probable. However, watch out for a FOBO (Fake Out Break Out) as price might break higher, only to fall rapidly through the bottom of the Hatchet and break the support at 1.2560. If this happens look for 1.2475 to be the next key level of support, and then 1.2375 before possibly forming a double bottom at 1.2300. If prices do continue higher after breaking out and 1.2760 is breached, look for prices to continue to 1.3020, which is a very strong level of resistance and highly probable bounce point. In the near term my outlook is Bullish, but in the bigger picture I still remain Bearish.
Happy Trading!