EUR/USD Bounces Off Key Long-Term Support: Is a Bullish Correction Starting?
24 October 2024
A lot is happening on EUR/USD right now, and it’s no surprise, as the pair is currently testing absolutely key support. The chart clearly shows the severe downtrend that began at the end of September and into early October. This downtrend has been harsh for the euro, while the dollar has benefited greatly. However, every trend reaches a turning point, and while we cannot be sure if we’ve hit that point today or if it occurred yesterday, the current price level is an excellent candidate for the start of at least a bullish correction.
What makes this level so critical? The price is now sitting on a long-term uptrend line, which has been connecting higher lows since October 2023. This trendline has been tested and held firm in both April and June 2024. Once again, the price has bounced off this uptrend line, and it’s currently holding at a reasonable distance from it. If the price can sustain its position for the rest of the day and close near the day’s highs, we may be witnessing the start of a bullish correction.
As we look ahead, the first potential target for this correction would be around the 38.2% Fibonacci retracement level. While not the strongest take-profit point, it is a logical target given the proximity to the uptrend line. If the bounce proves to be solid, we can expect the price to aim for this level. This setup offers a great risk-to-reward ratio, as a stop-loss can be placed just below yesterday’s low, with the take-profit much higher, making this a potentially rewarding trade if the bullish momentum continues to build.