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  • EUR/USD’s 4-hour chart is reporting a falling wedge pattern.  
  • A wedge breakout looks likely with bullish RSI divergence.  

EUR/USD is currently trading at 1.1203, having hit a low of 1.1193 in the overnight trade – a level last seen on June 19.  

Notably, the recent drop from 1.1412 has taken the shape of a falling wedge pattern on the 4-hour chart. A falling wedge comprises of trendlines connecting lower highs and lower lows in contracting range – a sign of bears losing stream.  

As a result, a breakout is often followed by a rally. in EUR/USD’s case, a move above the upper edge of the falling wedge, currently at 1.1217, would confirm a breakout and open the doors to a retest of 1.1264 (4H 200-candle moving average).  

A breakout looks likely as the 4-hour chart relative strength index (RSI) has created a bullish divergence. The prospects of wedge breakout, however, would weaken if the pair finds acceptance below 1.1193, invalidating the bullish divergence of the RSI.  

4-hour chart

Trend: Bullish above 1.1217

Pivot points