EURUSD resumed upside in the second trading week of 2018. Will price hit 1.25 soon? The following analysis is based on 15-19 January EURUSD Weekly Elliott wave analysis.
13 January, AtoZForex – EURUSD hit 1.22 at the end of the second trading week in 2018 after a corrective dip in the first week. This followed our forecast perfectly. The bullish trend which dominated 2017 was discovered to be in the 5th wave of the 2017 impulse wave. The last leg of this impulse wave was aimed to reach 1.25 before any signs of large correction. Until this impulse wave is complete, we may not see any huge drop.
Elliott wave theory helps to identify how far a trend has traveled and when a correction will probably come in. Trends are in five waves – Impulse wave or Diagonals while corrections are in 3-waves – Zigzags, Flats or Triangles. At the end of the impulse wave in EURUSD, a corrective wave downside will be expected.
In the last update, at the beginning of the second trading week, 8-12 January, we used the chart below.
Price is expected to continue the bullish trend this week above 1.196 as wave iii of 5 completes. It should be noted that the rally could still be alternatively labelled as a corrective zigzag which could lead to a strong fall. To keep the bullish trend intact, price is expected to brek the channel upper line upside toward 1.25.
What happened afterward? The chart below shows what happened and what could happen next.
15-19 January EURUSD Weekly Elliott wave analysis
Price rallied above the channel line just as expected as the 5th wave continues. Price is about completing wave iii of (iii) of the 5th wave rally. It seems the rally will shoot above 1.25 if labeling above is proved right by the market. What should we expect in the coming week? If the break above the channel is sustained, a retesting of the channel could form a support for more move upside. Unless price returns to the channel, the bullish trend is expected to continue. Stay tuned for the mid-week update.
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