EURUSD Reversal in Sight: Is a Bounce to 1.095 Next Or 1.05?

24 Okt

In my last EURUSD trade post from August, we anticipated a strong sell-off from the 1.12 level (see related post). Price action has unfolded just as expected, with a sharp decline in recent weeks.


So, what’s next? Looking at the charts, a short-term correction toward 1.09500 could be on the horizon. Let’s break down the charts.


Starting with the Monthly charts, we can clearly see that EURUSD has been range-bound for nearly two years, fluctuating between 1.12 and 1.055.





Zooming into the weekly charts, the recent sell-off has driven the price deep into this range, reaching two key support levels: diagonal support and the August low, both highlighted in the image below.





However, we can’t start buying at these levels just yet. The next step is to zoom into the daily charts to check for any signs of momentum shifting.


On the daily charts, the downward move is clearly overextended, and the market is extremely oversold—my first clue that a potential buying opportunity may be approaching.





To confirm this analysis, I’ve zoomed into the 4-hour chart, and here I’m seeing divergence on the MACD, suggesting that sellers may be running out of steam.





My strategy for this setup is to wait for a break of the 4-hour trendline, then watch for the next correction downward. Once that happens, I’ll use my TRFX indicator and enter on the first 4-hour signal.


The target for this trade will be the 1.095 resistance level, as I expect buyers to re-enter here, potentially pushing the market back down to the bottom of the range.


Let me know your thoughts below!