When examining the monthly scale of EUR/USD, it becomes apparent that there is potential for a significant breakout. This is evidenced by the higher highs and higher lows that have been forming. In January 2023, the price reached a peak at $1.2448, followed by a higher low of $1.1803 in March 2023. Subsequently, another higher high was recorded at $1.3142 in July 2023. The most recent data from October 2023 points to a possible higher low at $1.2037. This progression suggests that a break above current resistance levels could be imminent.
Looking at the daily timeframe, we see that the price recently broke above the resistance at $1.2683. This move came after a rebound from a strong support zone created by the 61.8% and 38.2% Fibonacci retracement ratios. As long as the pair remains above $1.2683, there appears to be limited resistance ahead until reaching levels between $1.2817 and $1.2795. This indicates a positive outlook for potential upward momentum.
On the H1 timeframe, the short-term price action is showing signs of an inverted head and shoulders reversal pattern. Some analysts may even interpret this as a complex inverted head and shoulders setup, given the characteristics of the right shoulder resembling a double-bottom formation. The shoulders are located around $1.2623 and $1.2616, with the head at $1.2613. The current price is close to testing the neckline of the pattern, drawn from the high of $1.2702. A breakthrough of this neckline could lead to a significant price movement, with potential profit objectives based on the head to neckline value extension.
It should be noted that there is a resistance level at $1.2721, which may act as a barrier for traders looking to enter long positions above the neckline of the pattern. This resistance aligns closely with the monthly resistance level discussed earlier at $1.2715. Therefore, careful consideration and monitoring of these levels are essential for traders seeking to capitalize on possible breakout opportunities in the EUR/USD pair.
Overall, the combination of longer-term trend analysis, daily timeframe observations, and short-term price action signals point towards potential bullish developments in the EUR/USD currency pair. Traders should closely monitor key levels and patterns to capitalize on potential breakout opportunities and maximize profitability in the forex market.