EURUSD: Possible Breakout of Downtrend Line?

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On the 1-hour chart for EUR/USD, the price is currently testing a descending trendline that has served as dynamic resistance over the past few days. After bouncing off a support level around 1.0453, the pair displays signs of strength and is nearing a crucial decision-making zone. The horizontal resistance at 1.0490 aligns with the trendline, and breaking through this area could signal a potential short-term bullish reversal.

A potential buying opportunity may arise if EUR/USD successfully breaks above the downtrend line and subsequently retests the broken level, which could act as support.

Expected Pattern: Breakout followed by Pullback.

Buy Scenario:

• Confirmation: A breakout above 1.0490 with a strong close, followed by a pullback to retest this level as support.
  
• Entry Point: During the pullback, near the 1.0490 area (previous resistance potentially turning into support).
  
• Stop Loss: Set below 1.0475 to protect against false breakouts.
  
• Primary Target (TP1): 1.0560, a horizontal resistance (approximately 70 pips gain).
  
• Secondary Target (TP2): 1.0600, a psychological level and key resistance (approximately 110 pips gain).
  

Alternative Scenario: Bearish Continuation

If the price fails to surpass the 1.0490 resistance and drops below 1.0475, a retest of the support at 1.0450 is probable.

• Possible Sell: Close below 1.0453, targeting 1.0430 or lower.
  

In Summary

The primary scenario indicates a bullish outlook if EUR/USD breaks and holds above 1.0490, with potential targets at 1.0560 and 1.0600. However, traders should keep an eye on price behavior at the resistance level, as a rejection may trigger renewed selling pressure.

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