EURUSD is rallying back to 1.172 as it tries to complete a corrective rally before possibly going deeper. The following 2-3 July EURUSD Elliott wave analysis looks at high likely possibilities.
Since mid-June when EURUSD dropped from 1.185, it has remained between the the same price (1.185) and 1.15. These two price levels are significant technical levels that could lead to where next price could go. A break above 1.185 could send price much higher likewise a dip below 1.15 could send price much deeper. None of these has happened yet as price quietly stays between the two levels. Often times when price stays within a range of this type, a big move would follow. There are sideways patterns discussed by Elliott wave theory. In today’s update, we would look at the two most probable. Before that, let’s review the last update where the chart below was used.
The preferred move is still bearish. A break above 1.172 should be a warning for a corrective rally. This would mean that the 5th wave ended at 1.15. If price stays below 1.172, we might still see it dropping below 1.15. Once price breaks below 1.15, the bearish impulse wave would continue to 1.10.
Since this update, price rallied slightly and now looked to have completed a flat corrective pattern. The picture price is trying to paint is not clear yet. The charts below show two scenarios that are very likely.
2-3 July EURUSD Elliott wave analysis: First scenario
Wave 2 of (5) might just be ending with a flat pattern. Flat patterns are sideways patterns with the first two legs as corrective waves and the last leg as a motive wave. This looks like a regular flat pattern. If this holds, we should see wave 3 of (5) taking control soon and price getting below 1.15. This however, may not be the case as we know how price reacts to Flat patterns. More often than not, Flat patterns morph into a different pattern even after completion. We might still see price getting back to 1.17 as the second scenario below suggests.
2-3 July EURUSD Elliott wave analysis: Second scenario
The other sideways pattern is the triangle. Triangles occur more often than Flats and are often more reliable. The rally since the drop from 1.185 could mean that wave (4) has not completed yet. The rally to 1.185 probably has not completed wave (4) and price could now make a triangle pattern. We are back to the larger time frame to see this clearly as the chart above shows. The odds still favors the bears from a technical analysis perspective though price could move anyway. At this level, when the wave patterns are not clear enough,opinions and forecast change fast and patience is needed. The first scenario looks closer to current realities than the second which still has some way to go. Stay tuned for the next update to know which of these scenarios is playing out.
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