TAKEAWAYS
- EUR/USD executes bearish flag formation
- Leaves rising trend channel by breaking rising support line as a result
After a rally from $1.045 to a high of $1.1140 from October to December 2023, the EUR/USD exchange rate has now executed a bearish flag formation, which resulted in an acceleration of the decline (strength for USD). As a result, the currency pair has now also broken below trendline support, adding to and confirming the bearish outlook for the next few weeks.
Based on the flag formation, a price target between $1.0650 and $1.0700 can be calculated. That area coincides with the horizontal (green-shaded) support area that has offered support and resistance over the last 8-9 months.
Upside potential for EUR/USD is now limited, as the former support line and the lowest point of the flag are expected to start acting as resistance overhead.
Julius de Kempenaer
Senior Technical Analyst, StockCharts.com
Creator, Relative Rotation Graphs
Founder, RRG Research
Host of: Sector Spotlight
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