EUR/USD Bullish Trend Continues with Flag Breakout

By Tomasz Wisniewski|

Published: May 28 2024, 05:30 GMT+0

EUR/USD Bullish Trend Continues with Flag Breakout


Yesterday in our weekly market commentary, we highlighted a bullish setup on EUR/USD, and it has played out as expected. To provide some context, EUR/USD has been in an uptrend for quite some time, supported by a rough black uptrend line. Throughout this period, we have observed three major corrections, each forming flag patterns marked by orange lines.

Most recently, EUR/USD formed another flag pattern. Prior to the breakout, the price experienced a short-term sideways trend, marked in yellow. Yesterday, the price broke out from this sideways trend to the upside, surpassing the upper line of the flag and moving higher. This breakout is a strong buy signal, reinforcing the bullish sentiment.

The current uptrend in EUR/USD is underpinned by several technical factors. The black uptrend line, though not perfectly precise, provides a general direction and support for the bullish movement. The flag patterns, typical continuation patterns in a trend, indicate temporary pauses or corrections before the prevailing trend resumes. The recent flag formation suggested a consolidation phase, preparing for a potential breakout.

When the price broke above the upper line of the flag and the short-term sideways trend, it confirmed the bullish continuation. This move has established a positive outlook for EUR/USD, signaling that buyers are in control and pushing the price higher. The breakout indicates strong market sentiment favoring further appreciation of the euro against the dollar.

In the short term, it is possible to see minor bearish corrections as traders take profits or as the market consolidates gains. However, the medium- and long-term outlook for EUR/USD remains positive. The recent breakout has set the stage for further gains, with potential targets above the current levels. Traders should watch for support levels around the breakout point, as maintaining above these levels will sustain the bullish momentum.