[EUR/USD] Is an Uptrend Forming on the 1-Hour Chart? In-Depth Analysis of the 1.1240 Break and Future Outlook

EUR/USD Analysis – Breaks Through 1.1240, Clear Signs of Short-Term Trend Reversal

Overview (May 19, 2025)

As of May 19, 2025, EUR/USD has broken above 1.1240, strengthening its upward momentum. Over the past few days, it had been consolidating in the 1.1180–1.1220 range, but surged during the late Tokyo session into London trading, resulting in an upside breakout. A strong bullish candlestick has formed accompanied by high volume, highlighting the possibility of a short-term trend reversal.

From a technical perspective, several bullish signals are appearing, including a crossover of the 50-hour and 200-hour moving averages, rising ADX and DMI, and increasing volume. If the uptrend continues, the next targets are likely to be around 1.1280 and 1.1300. However, in case of a short-term pullback, the 1.1210–1.1220 zone could offer a buying opportunity.

Key Point 1: Break Above 200-Hour Moving Average Shifts Market Sentiment

A key technical factor is EUR/USD breaking above the 200-hour moving average (red line). Previously a resistance level, the 200MA is now being traded above, reflecting stronger short-term buying interest. In addition, the 50-hour moving average (blue line) is now acting as a support level from below, indicating the early stages of a golden cross.

This moving average setup is a classic signal of a short-term trend reversal and can attract buy entries from technical traders. If the recent high near 1.1240 functions as support, reaching the next resistance zone at 1.1280–1.1300 becomes a realistic target.

Key Point 2: Rising ADX and DMI Increase Confidence in Buy Trend

To assess the strength and direction of the trend, the behavior of ADX (Average Directional Index) and DMI (Directional Movement Index) is crucial. As shown at the bottom of the chart, the ADX is rising clearly and currently sits in the 0.015 range. Though still in the early stages of the trend, this is often referred to as the “accumulation phase,” a high risk-reward opportunity for traders.

Additionally, the +DI (green line) is significantly above the –DI (red line), confirming a strong upward trend. If this condition continues and ADX surpasses 0.020, it will signal the emergence of a “strong trend,” making it a key reference point when taking positions.

Key Point 3: Volume Surge Confirms Uptrend Reliability

Alongside price movement, volume should be carefully monitored. In this uptrend phase, a clear increase in volume has been observed, suggesting that the move is likely driven by real demand or inflows from short-term investors rather than a fake breakout with only a wick.

In particular, volume surged as the price broke above 1.1220, indicating that this level was viewed as a key breakout point. If volume remains strong during future pullbacks, the likelihood of reaching new highs increases.

*Image Source: cTrader platform

Future Outlook and Trade Strategy

For assessing the short-term trend and strategy of EUR/USD, the following levels are key:

• Holding 1.1240 as pullback support: If this level, which marked the breakout, holds, it offers a good buy continuation opportunity.
• Breaking through the 1.1260–1.1280 resistance zone: A short-term target area that could accelerate momentum.
• ADX exceeding 0.020: A benchmark for confirming the trend. Surpassing this may indicate a shift to a medium-term trend.
• Persistence of volume: Sustained volume in the uptrend phase is key to continuation.

Sample Trade Scenarios

Bullish Scenario (Buy the Dip after Breakout)
Entry: Long at 1.1240–1.1250 dip
Take Profit: 1.1280–1.1300
Stop Loss: Below 1.1210

Bearish Scenario (Short-term Short on Reversal)
Entry: Short on failed rebound at 1.1260–1.1270
Take Profit: 1.1215–1.1200
Stop Loss: Above 1.1285

Conclusion:

EUR/USD currently shows signs of a short-term trend reversal, with the breakout above 1.1240, rising volume, and bullish signals from ADX and DMI strengthening the upward momentum. Going forward, key factors include whether it can break above 1.1260–1.1280 and how much buying pressure remains on dips. A trend-following buy strategy with thorough risk management is recommended.

Disclaimer:

This article is for informational purposes only and does not constitute a recommendation to buy or sell any specific financial product. All trading decisions are your own responsibility.
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