Overview: The EUR/USD pair is currently exhibiting a potential continuation of the downtrend, as seen on both the weekly and 4-hour timeframes. The weekly chart shows a Flat ABC correction or Flag structure, which now aligns with a flag correction on the 4-hour chart. This flag, combined with hidden divergence, further confirms a shorting opportunity as the market prepares to continue its bearish movement.
Overview: The EUR/USD pair is currently exhibiting a potential continuation of the downtrend, as seen on both the weekly and 4-hour timeframes. The weekly chart shows a Flat ABC correction or Flag structure, which now aligns with a flag correction on the 4-hour chart. This flag, combined with hidden divergence, further confirms a shorting opportunity as the market prepares to continue its bearish movement.
Technical Analysis: Weekly Timeframe: Flat ABC Correction/Flag Structure: The weekly chart reveals a corrective phase in the form of a Flat ABC correction or Flag pattern, with wave C anticipated to drive prices lower. The completion of wave B and the anticipated development of wave C suggest a strong bearish continuation, providing a high-probability shorting setup. 4-Hour Timeframe: Flag Correction:
On the 4-hour chart, a flag correction has formed, which is typically a continuation pattern indicating the potential for further downside movement. The price action within the flag is consolidating, likely preparing for a breakout to the downside, in line with the overall bearish outlook on the weekly timeframe.
Hidden Divergence: Hidden divergence between the price and momentum indicators (such as RSI or MACD) on the 4-hour chart further supports the likelihood of a continuation of the downtrend. The hidden divergence occurs when the price makes lower highs while the indicator makes higher highs, suggesting that the recent consolidation is a pause before the next leg down.
Trade Setup: 1. Short Position Setup: Entry: Consider entering a short position below the 1.08824 price level of the 4-hour flag pattern or upon confirmation of a breakout to the downside of the 1.08824. Target: Target the completion of wave C on the weekly chart, which could align with significant support levels identified on both the 4-hour and weekly charts. Stop-Loss: Place a stop-loss above the upper boundary of the flag pattern to manage risk. This stop should be above the recent highs or the invalidation level of the flag.