Inflection point on rising wedge formation for EURUSD

ON the backdrop of an overall bearish trend, EURUSD experienced a lacklustre year in 2019 with a total range of only 600 pips throughout the year. The pair took a nosedive as it entered into 2020 and reached a three-year low at 1.0771. Prices then whipsawed approximately 700 to 800 pips from February to March approaching a further low of 1.0638 (low of 2020).

Since then, EURUSD has been in a reversal, gradually ascending in a bullish manner as it reaches towards the highs of 2018. Various signs indicate a potential retracement and possibly turning the tide back into a longer-term downtrend again.

The first sign is that current price has just been rejected off the dynamic resistance of the rising wedge pattern. A rising wedge pattern is formed when prices are moving in an upward fashion with the highs and lows converging towards a narrowing range, and eventually a single point known as the apex. The pattern is typically identified as a reversal pattern which results in price breaking down upon converging at the apex. This supports a move lower either as a retracement or a complete reversal.