Ending Diagonal failed
The Euro moved lower, consolidated at yesterday's low with a three swing triangle consolidation pattern (9 - 11 a.m. GMT, red circle on 5 min chart below) and resumed it's down trend to the 127 % butterfly target/ daily S2 to find some support.
Yesterday's ending diagonal triangle failed. We might interpret the price action on the hourly/ 4-hour chart as a wedge/ ending diagonal (blue lines) but the pattern does not totally convince me. A fresh lower low would lead to a failure of the pattern. However, the wedge pattern would fit to the butterfly reversal pattern.
The main question will be whether the 127 % butterfly target (1.2163) could provide some solid support or whether the Euro will continue to the 161 % butterfly target at 1.2005.
On the 4-hour chart (below) we see a bear flag (blue circle), which got triggered and the Euro moved to the 127% butterfly target. This support level further got strengthened due to the daily S2 and the 100 % fib extension. The green circles show how the 20 SMA provided resistance and the red circles show yesterday's timing setups.
On the 5 min chart (below) we see the three wave/ triangle consolidation (red circle), which is visible as a bear flag on the 1 hour chart. The green circle shows a small bear flag prior to the breach of yesterday's low (red line) with the beginning of the new hourly candle at 11 a.m. (Timing). The blue circle on the 5 min chart shows another bear flag which got triggered with the beginning of the new 4-hour candle at 12 a.m. (Timing setup).
The Euro found support in the price zone of the 127 % butterfly target/ daily S2. The fact that market could not breach the 61.80 % fib extensions from the previous swings and bounced from it (not consolidated at it- no bear flag) is often a sign for a larger consolidation or reversal (brown circle).
Next support zone would be the 61.80 % weekly fib extension/ weekly S1 at 1.2133.
Next resistance is Monday's gap opening at 1.2252 and the low of June 1st at 1.2288
|4-hour Failed Ending Diagonal Pattern|
|5 min Triangle Pattern|