EURUSD - Can Bulls Maintain Control?

Mar 18

Overview
The EUR/USD 4-hour chart is currently displaying strong bullish momentum, confirmed by a breakout above a key resistance zone that previously acted as a rejection area. The price has successfully closed a candle above this resistance, indicating a shift in market sentiment toward further bullish movement. Additionally, the pair has been forming higher lows, a crucial sign of a strengthening uptrend. The combination of these technical factors suggests that EUR/USD is in a strong bullish phase, with the potential for continued upside movement. If this breakout holds and the market structure remains intact, we could see further bullish expansion in the coming sessions, making this a critical moment for traders to assess potential trading opportunities.

Detailed Analysis

1. Breakout of a Key Resistance Zone
The highlighted red resistance zone on the chart represents a historically significant level where price action has previously struggled to break through. This area has acted as a strong supply zone, leading to multiple rejections in the past. However, in the most recent price movement, EUR/USD has managed to break above this level, closing a 4-hour candle above it. This is a major bullish signal, as it confirms that buyers have gained control and are pushing the price into new territory.

A candle close above a key resistance zone is often seen as a strong confirmation that a breakout is valid. False breakouts are common in trading, but the presence of a solid close above the level reduces the likelihood of a fakeout and increases the probability of sustained bullish momentum. If the price remains above this level and does not fall back into the previous range, the breakout is likely to hold, opening the door for further upside movement.

2. Formation of Higher Lows and a Strong Uptrend
One of the most important indicators of bullish strength is the formation of higher lows, which we can clearly observe in this EUR/USD price action. Higher lows indicate that buyers are stepping in at progressively higher price levels, preventing the market from making deeper pullbacks. This shows increasing buying pressure and confidence among market participants.

The ascending trendline visible on the chart further confirms this bullish structure. As long as the market continues to form higher lows and remains above the trendline, the bullish trend remains intact. Traders often use these trendlines as dynamic support levels, meaning that future pullbacks could present opportunities to buy at favorable levels before the price resumes its upward movement.



3. Price Action Scenarios and Potential Market Behavior
Scenario 1: Retest and Continuation
A common pattern after a breakout is a retest of the broken resistance, which now acts as new support. If the price pulls back to this zone and finds strong buying interest, it would provide a high-probability long setup. A successful retest followed by bullish confirmation (such as bullish candlestick patterns or high buying volume) would signal that the breakout is strong and that the market is ready to continue higher.

Scenario 2: Immediate Bullish Expansion
If the buying pressure remains strong, the price may not even need a deep retest and could continue rallying straight to the next resistance levels. This would indicate strong market conviction and could lead to an accelerated bullish move.

Scenario 3: Fakeout and Breakdown
While this is less likely given the current structure, traders should remain aware that sometimes breakouts fail, and the price can fall back below the broken resistance. If this happens, it would invalidate the bullish scenario and suggest that the market still lacks the strength to sustain higher prices.

4. Key Levels to Watch for Confirmation
To manage risk effectively and identify potential trade opportunities, it is essential to monitor key price levels:

Support Level (Retest Zone)
The previous resistance zone, now acting as support, should be closely observed. If the price remains above this level and forms bullish price action (such as bullish engulfing candles, pin bars, or high-volume buying), it would confirm the breakout and signal further upside potential.

Resistance Levels (Upside Targets)
The next potential resistance areas can be found by analyzing previous swing highs and psychological price levels:

• 1.1000 level – A major psychological round number that could act as the next short-term target.
  
• 1.1100 – 1.1200 zone – The next key resistance area based on historical price action.
  

Conclusion and Trading Strategy Consideration

Conclusion

EUR/USD is showing strong bullish momentum, with a confirmed breakout above resistance and a candle close supporting this move. The formation of higher lows reinforces the bullish outlook, suggesting that buyers are in control. As long as the price remains above the broken resistance zone, the probability of further upside remains high.

Given the strong technical structure, bullish market sentiment, and the presence of higher lows, EUR/USD is looking very bullish at the moment, with the potential to reach higher resistance levels in the near future. Traders should remain attentive to key price action developments to maximize trading opportunities in this trending market.

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Mar 20

Trade active

EURUSD broke out of it's support and is looking bearish. I will be looking for short entries