Hi Traders! We have potential EURUSD double scenario forming at the moment. A detailed analysis of this setup is as follows:
EURUSD H4 Chart:
On the H4 chart it looks like there is a possibility of one more push to the downside with the price creating double wave down. If we get a double wave down then we may expect the second leg of this double wave to reach the 61.8 fibo expansion level of the first wave. This 61.8 fibo expansion level coincides with the 38.2% fibo retrace of the double wave up, thus forming a critical zone for us. If this zone holds then we may expect a bullish reversal to happen from here and we can join the bulls. We also have a good uptrend line that has formed so there is a good possibility that the price might push lower further and a bullish reversal might happen after the price reaches this uptrend line. In addition to this the price is building a hidden bullish divergence so if we get a bullish divergence on lower timeframe, we may consider it as a confirmations for the bullish momentum and we can join the bulls.
EURUSD H1 Chart:
On the H1 chart we had a head and shoulder pattern, which has completed itself and we may now expect this pattern to repeat itself. If we duplicate the distance between the neckline and the head of this pattern, it coincides on the same zone where we have the 61.8 fibo expansion and 38.2 fibo retrace. We also have a perfect downtrend line that has formed and as long as this trend line is holding we may expect one more push to the downside. The ideal scenario for buys according to me would be the price to push lower reaching the 61.8 fibo expansion level, forming a bullish divergence with false break. We can then start looking for buys with the breakout of the downtrend line. There is also a possibility that the bullish reversal might happen once the price reaches the uptrend line. At the meantime until this downtrend is holding we may look for short term sells.
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