EURUSD: Bullish Butterfly Hints at Upside Breakout (April 17, 2024)

Arif Chowdhury
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Last Updated on April 17, 2024 by Arif Chowdhury

EURUSD Harmonic Pattern Forex Trading Signals & Analysis

Key Levels:

  • Current Price: 1.0627
  • Potential Take Profits:
    • 1.0709 (Fibonacci 38.2%)
    • 1.0776 (Fibonacci 61.8%)
  • Stop Loss: 1.0565

Technical Analysis:

  • H4 Chart: Our harmonic pattern analysis on the H4 timeframe reveals a confirmed bullish butterfly pattern. This pattern typically precedes a bullish trend reversal, suggesting a potential breakout to the upside.
  • M30 Chart: While the M330 chart displays a range-bound price movement, lacking a clear directional bias, the confluence with the bullish signal from the H4 timeframe strengthens the case for an eventual upside breakout. The ranging behavior in the M30 could be interpreted as a consolidation phase before a stronger move upwards.

Trading Strategy:

Based on the identified bullish butterfly on the H4 chart and the ranging consolidation on the M30 timeframe, we recommend a long trade on EURUSD with the following parameters:

  • Entry Price: A break above the current resistance level (around 1.0645) would offer a confirmation of the bullish breakout, potentially providing a better entry point. Alternatively, a conservative entry could be placed at the current price (1.0627) with a tighter stop loss.
  • Take Profit: Two potential take profit levels are identified based on Fibonacci retracements of the previous downtrend:
    • 1.0709 (Fibonacci 38.2%)
    • 1.0776 (Fibonacci 61.8%)
  • Stop Loss: A stop loss should be placed below the recent swing low at 1.0565 to mitigate potential downside risk.

Risk Management:

It’s crucial to maintain proper risk management throughout the trade. Ensure the stop loss placement adheres to your risk tolerance and account size. Consider using a position sizing strategy that limits potential losses while allowing for profit potential.

Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Always conduct your own research before entering any trade.