EUR/USD Price Analysis: Bulls eye a 50% mean reversion near 0.9950
- EUR/USD bulls are committing at 0.9925 support.
- If the right-hand shoulder of the H&S continues to build above 0.9900, then a 50% mean target 0.9950 will be eyed.
As per the prior analysis, EUR/USD Price Analysis: Bears eye a move into test 0.9900, the price indeed moved in to test the round number, reaching a low of 0.9877 on the day. This happened in a bearish gap and subsequent follow-through as the US dollar firmed to score fresh bull cycle highs around 110.20 as per the DXY index.
The dollar has since been faded which gave some relief to the forex space and the euro. At the time of writing, DXY is trading at 109.779 and recently plummeted to 109.534.
The euro's recovery has started to decelerate but the price is yet to close the opening gap or correct meaningfully to a significant retracement of the prior 4-hour bearish impulse. This leaves prospects of a deeper bullish correction for the day ahead as illustrated in the following analysis.
EUR/USD prior analysis, H4 chart
It was explained that the price had dropped heavily from the 78.6% Fibonacci retracement area that met with the resistance of the M-formation's neckline. The tweezer top was also a bearish feature and a move to test support was on the cards should 0.9940 give out:
EUR/USD live update
The price is creeping in on the gap and it has made a 38.2% Fibonacci retracement, but a fuller correction could be on the cards prior to the next bearish impulse to the downside:
EUR/USD H1 charts
On the chart above, the bullish inverse head and shoulders are a compelling feature on the hourly time frame. this is also accompanied by the W-formation below:
Should the support around 0.9925 hold, then an imminent bullish impulse could be on the cards. If the right-hand shoulder continues to build above 0.9900, then the bulls will be seen to be committing to the correction for the day ahead and a higher retracement on the breakout would be expected. The 50% mean reversion target is located around 0.9950.