Since break above 1.4446 on August 08, the Greenback has been under pressure against the Euro up to the third week of September, topped at 1.4766 this week as investors become more optimistic about global economy recovery. The outlook should remains bullish for the pair and I will only look for long trades at this phase with potential bullish target around 1.5000 area. However, if you read my daily analysis lately, I have been concerned about potential downside correction indicated by rising wedge. A look at my h4 chart below reveals that the rising wedge has been violated to the downside. Technically, this is a confirmation of potential downside correction scenario. Well, I love corrections because it’s natural and always give me the best trade opportunities and deliver good risk-reward ratio.
The question now is how low (if the correction take place) can it go? I think we have 3 support levels at this phase which can be potential bearish correction targets but also potential place to open long positions especially if we see downside rejection around these levels:
1.4630: 23.6% Fibo retracement of 1.4190 – 1.4766. The price tested this level on Friday but we saw downside rejection as the pair failed to move below this level and closed higher at 1.4710.
1.4550: 38.2% Fibo retracement of 1.4190 – 1.4766. Has not touched yet since break above 1.4446 but should be the next bearish correction target if 1.1630 break to the downside.
1.4446: The key support level. I do not expect this level to be touched because a break below this level is violation to the bullish outlook.
Have a great weekend and see you guys next week!