EUR/USD: Bullish Falling Wedge Breakout Towards TargetLet’s analyze the 1-hour candlestick chart of EUR/USD (Euro / U.S. Dollar) on TradingView, published by GoldMasterTraders on April 2, 2025, at 19:04 UTC. The chart highlights a trading setup based on a Falling Wedge pattern, indicating a potential bullish breakout. I’ll describe the chart pattern and the trading setup in detail.
Chart Pattern: Falling Wedge
Pattern Description
Type: The chart identifies a Falling Wedge pattern, which is a bullish chart pattern that typically signals a reversal or continuation of an uptrend. A Falling Wedge forms when the price consolidates between two downward-sloping trendlines that converge over time, with the upper trendline (resistance) sloping more steeply than the lower trendline (support).
Appearance on the Chart:
The Falling Wedge is clearly marked with two converging trendlines:
Upper Trendline (Resistance): Connects the lower highs, sloping downward.
Lower Trendline (Support): Connects the lower lows, also sloping downward but at a less steep angle.
The pattern began forming around March 19, after a sharp decline from 1.9400 to 1.8700, and continued until the breakout on April 2, 2025.
Breakout Direction:
Falling Wedges are typically bullish, meaning the price is expected to break out to the upside. The chart shows the price breaking above the upper trendline of the wedge around April 2, 2025, with a strong bullish candle, confirming the breakout.
The breakout level is around 1.90840, and the price has moved slightly above this level, closing at 1.90864 at the time of the chart.
Key Levels and Trading Setup
1. Support Level
A horizontal support zone is marked around 1.90730 (approximately 1.9070–1.9080).
This level acted as a base during the wedge formation, with the price bouncing off this zone multiple times (e.g., on March 23 and March 30).
The support level aligns with the lower boundary of the wedge, reinforcing its significance as a key area of buying interest.
2. Resistance Level
A resistance zone is marked around 1.92000 (approximately 1.9190–1.9210).
This level corresponds to a previous high reached on March 19, before the wedge formation began. It represents a significant barrier where selling pressure previously emerged.
After the breakout, the price is expected to test this resistance as part of the bullish move.
3. Target
The target for the breakout is projected at 1.92110.
This target is likely calculated by measuring the height of the wedge at its widest point (from the highest high to the lowest low within the pattern) and projecting that distance upward from the breakout point.
The chart indicates a potential move of 0.00435 (0.40%), which aligns with the distance from the breakout level (around 1.90840) to the target (1.92110).
4. Stop Loss
A stop loss is suggested below the support level at 1.90730.
This placement ensures that if the breakout fails and the price falls back into the wedge, the trade is exited with a manageable loss.
The stop loss is just below the breakout level (1.90840), with a distance of approximately 0.00110, representing the risk on the trade.
Trading Setup Summary
Entry:
The setup suggests entering a long (buy) position after the price breaks out above the upper trendline of the Falling Wedge, which occurred around April 2, 2025. The breakout is confirmed by a strong bullish candle closing above the trendline at approximately 1.90840.
Stop Loss:
Place a stop loss below the support level at 1.90730 to protect against a false breakout or reversal. The distance from the breakout level (1.90840) to the stop loss (1.90730) is 0.00110, or about 0.06% of the entry price.
Take Profit/Target:
Aim for the target at 1.92110, which is near the next significant resistance level. The distance from the breakout level to the target is 0.01270, or a 0.40% move.
Risk-Reward Ratio:
The risk is 0.00110 (from 1.90840 to 1.90730), and the reward is 0.01270 (from 1.90840 to 1.92110), giving a risk-reward ratio of approximately 11.55:1 (0.01270 / 0.00110). This is an exceptionally high risk-reward ratio, making the setup very attractive, though traders should ensure the breakout is well-confirmed due to the tight stop loss.
Additional Observations
Price Action Context:
Before the wedge formed, the price experienced a sharp decline from 1.9400 (March 13) to 1.8700 (March 19), indicating a strong bearish trend.
The Falling Wedge represents a consolidation phase within this downtrend, and the upside breakout suggests a potential reversal or at least a corrective move higher.
Volume and Momentum:
The chart doesn’t display volume or momentum indicators (e.g., RSI, MACD). However, a typical confirmation of a Falling Wedge breakout would include:
An increase in volume on the breakout candle, indicating strong buying interest.
Bullish momentum signals, such as an RSI above 50 or a bullish MACD crossover.
Traders might want to check these indicators for additional confirmation of the breakout’s strength.
Timeframe:
This is a 1-hour chart, so the setup is intended for short-term trading, with the target potentially being reached within a few hours to a day.
Market Context:
EUR/USD is influenced by factors like U.S. dollar strength, Eurozone economic data, and interest rate differentials. A bullish move in EUR/USD could be driven by a weaker dollar (e.g., due to dovish U.S. economic data) or positive Eurozone developments.
Conclusion
The TradingView idea presents a bullish setup for EUR/USD based on a Falling Wedge pattern on the 1-hour chart. The price has broken above the wedge’s upper trendline, confirming a bullish move with a target of 1.92110. The setup includes a stop loss at 1.90730 to manage risk, offering an impressive risk-reward ratio of 11.55:1. Key levels to watch include the support at 1.90730 and the resistance at 1.92000. Traders should consider additional confirmation from volume and momentum indicators, as well as broader market conditions, before executing the trade. Since this chart is from April 2, 2025, market conditions may have evolved, and I can assist with searching for more recent data if needed!
