EUR/USD Price Analysis: Trapped in a rising wedge
- EUR/USD has carved out a rising wedge pattern on the daily chart.
- The daily RSI favors a rising wedge breakdown, a bearish reversal pattern.
After failing to keep gains above 1.23 for four straight trading days, EUR/USD finally found acceptance above the psychological hurdle on Wednesday.
At press time, the pair is trading near 1.2332. With the newfound resistance scaled, the path of least resistance appears to be on the higher side.
However, readers should note that the rally from the November low of 1.1602 has taken the shape of a rising wedge. The pattern comprises converging trendlines connecting higher lows and higher highs and is considered a bearish reversal pattern.
A move below the lower end of the rising wedge, currently at 1.2277, would confirm a breakdown or bearish reversal and open the doors for a re-test of 1.20. The bearish divergence of the 14-day Relative Strength Index indicates scope for a rising wedge breakdown.
Should the potential breakdown fail to invite offers, a more decisive move toward 1.25 will likely unfold.
Daily chart
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Trend: Bearish