The monthly scale of the currency pair has shown promising signs of a potential breakout. The price has been forming higher highs and higher lows, indicating a bullish trend. In January 2023, the pair reached a high of $1.2448, followed by a higher low of $1.1803 in March 2023. Subsequently, another higher high was reached at $1.3142 in July 2023. The recent price action in October 2023 suggests the possibility of a higher low at $1.2037. This pattern of higher highs and higher lows is typically indicative of an upward momentum in the market.
On the daily timeframe, the price has broken above a crucial resistance level at $1.2683. This breakout was preceded by a bounce from a support zone formed by the 61.8% and 38.2% Fibonacci retracement ratios at $1.2604 and $1.2645, respectively. The current price trajectory suggests that as long as the pair remains above $1.2683, it may encounter limited resistance until the range of $1.2817 to $1.2795. This indicates a clear path for a potential bullish movement in the near term.
In the short term, the price action on the H1 timeframe is forming an inverted head and shoulders reversal pattern. The left shoulder is at $1.2623, the head is at $1.2613, and the right shoulder is around $1.2616. The price is nearing the neckline of the pattern, drawn from the high of $1.2702. A breakout above this neckline could trigger a bullish momentum, with profit objectives typically calculated by extending the length from the head to the neckline from the breakout point. However, traders should be cautious of the resistance level at $1.2721, which aligns closely with the monthly resistance level at $1.2715.
Overall, the analysis of the currency pair suggests a potential breakout scenario in the market. The longer-term trend, supported by the daily and H1 timeframe analysis, indicates a bullish sentiment. Traders and investors should closely monitor the key levels mentioned in the analysis to capitalize on potential trading opportunities.
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