The EUR/USD pair has been in an uptrend over the past few months, with the chart showing a clear formation of a Gartley harmonic pattern. Currently, the price is approaching a critical resistance zone at 1.12755 USD, where point D of the Gartley pattern could act as a potential top. Additionally, the TDIGM indicator shows overbought conditions, suggesting the market might be nearing a correction.
Key Levels: Resistance: 1.12755 USD (Fibonacci 0.618) and 1.12137 USD (Gartley Point D). Support: 1.09424 USD (Fibonacci 0.5 and Gartley Point B).
Technical Indicators: TDIGM: Showing overbought signals with values above 60, which may indicate exhaustion of the uptrend and a potential corrective move. Moving Averages: Price remains above support-moving averages, indicating a strong uptrend, though momentum could be slowing down.
Investment Strategies:
1.Short-Term Sell Strategy (Correction)
Entry: Between 1.1200 and 1.1275 USD, anticipating a reversal after the Gartley pattern completes and TDIGM signals overbought conditions. Stop Loss: Above 1.1300 USD to protect against a bullish breakout. Take Profit: Target near 1.09424 USD (Fibonacci 0.5 and Gartley Point B).
The Gartley pattern and overbought signals suggest a higher chance of a short-term correction, making this strategy quite viable. However, the risk-to-reward ratio may not be favorable.
2.Medium-Term Buy Strategy (Support Retest)
Entry: Between 1.0890 and 1.1039 USD, betting on a recovery after a potential correction. Stop Loss: Below 1.0850 USD to limit losses if the correction deepens. Take Profit: Primary target at 1.1275 USD (Gartley Point D). Possible extension to 1.1300 USD if there’s enough momentum to break through resistance.
A support retest has a good chance of leading to a rebound, but it hinges on a clear correction before the strategy materializes.
3.Breakout Buy Strategy (Uptrend Continuation)
Entry: Buy on a convincing breakout above the 1.1275 USD resistance.
Although this is an attractive opportunity, the overbought condition and Gartley pattern formation make the bullish breakout less likely in the short term.
Final Thoughts: EUR/USD is at a critical juncture, with key resistance at 1.1275 USD being tested and the Gartley harmonic pattern pointing towards a potential reversal. The short-term sell strategy based on a correction is currently the highest probability setup, given the overbought conditions and proximity to strong technical resistance. However, the risk-to-reward ratio may not be ideal. For medium-term investors, the buy strategy on a support retest appears to be a solid opportunity, particularly if the price approaches Fibonacci levels.
Keep an eye on support and resistance zones to maximize investment opportunities, and as always, monitor price action closely on lower timeframes for additional confirmation.