The Fed Interest rate decision took place on Wednesday and the expected rate hike 1.5% to 1.75 % did indeed take place. The Fed also confirmed to raise the rates “only” 3 times this year rather than the expected 4 times… According to this new data, what is the expected move for this pair?
In this article, we will discuss the potential price movements by using price pattern, support, resistance and SWAT software.
EUR/USD Daily Wave Pattern
EUR/USD daily chart is confirming the development of 4 waves and I think that soon the pair could be restarting the 5th wave. One more higher high as long as price stays above the 50% Fib of wave 4. The break above the previous top would confirm the final fifth wave.
EUR/USD 4 Hours Pattern
Wave traders know that impulsive waves like a wave 5 will usually have 5 internal waves on a smaller time frame. Alternatively, price could also be building an Ending Diagonal pattern.
However, for the moment we are expecting a bullish 5 wave pattern to take place. The price is now in wave 2 and waiting for confirmation for wave 3 to start.
Here are the main points to be considered:
- As long as the price did not break the previous bottom of wave 1 then this wave pattern is still valid.
- Wave 3 must go beyond Wave 1.
However in my view, traders must wait for clear confirmations before trading wave 3, and I will discuss this confirmation in the next paragraph by using SWAT software.
EUR/USD 4 Hours Swat Chart
Now it’s time to use the SWAT charts to pinpoint potential trade setups within the expected wave structure and pattern.
We see from the chart below that the price has fluctuated for some time so we need a clear confirmation before trading this pair. As mentioned above, I am only looking for buy positions because they match my expected wave patterns.
Here are the main conclusions:
- Price broke above the 144 EMA and 21 EMA.
- There is a regular bullish divergence.
- The price developed a flag but still waiting for the flag breakout to confirm the bullish momentum.