EURPLN: Navigating a Triple Bottom Formation
07 July 2023
As we wrap up this week in the markets, we focus our attention on an exotic instrument, EURPLN (Euro to Polish Zloty). This pair occasionally draws our attention due to its very technical behavior, and this time is no exception. The pair is currently demonstrating an interesting technical pattern that could indicate significant future moves.
On the chart, we are observing a reversal pattern, specifically a triple bottom formation, denoted by the yellow markings. The first resistance, the mid-term black downtrend line, has already been overcome, which is a positive indication for buyers. However, the pair is currently encountering a crucial resistance point - the neckline of this triple bottom formation, which is approximately at the 4.48 level (green). This level served as a critical support back in February 2022, and again in May 2023, and has acted as a significant resistance throughout June.
If the price closes above this green area (4.48 level), it would trigger a compelling buy signal. In the event of a bullish breakout, the next resistance would be the red downtrend line. However, if the pair manages to close above the green line, breaking the red line should be relatively straightforward.
Conversely, sellers might seize the opportunity to initiate a bounce. The price has already rebounded off this level few times, so it's plausible that we could witness a similar move. A significant close below the green area would send a sell signal.
In summary, EUR/PLN is at a critical juncture. The outcome of this current technical setup could offer a clear direction for the pair's future trajectory. While the bullish scenario seems more probable at the moment, traders should monitor this pair closely and base their decisions on confirmed breakout or breakdown signals.