Early in the London session, EURUSD is making upside moves. Will this continue? The following 5-6 July EURUSD Elliott wave analysis looks at the technical forecast of EURUSD based on Elliott wave theory.
EURUSD is driving toward 1.172 resistance level formed last week. It’s looking more likely that EURUSD would rally above. The FOMC comes later today and NFP tomorrow. Price is expected to break above the 1.185 resistance or below the 1.15 support. If 1.185 is broken upside, it would mean that the impulse wave we have watched for many weeks has ended at 1.15 with a truncated 5th wave diagonal pattern. To add to this, the dollar index made an important bearish breakout and could make the biggest dip since April. Events like FOMC and NFP do not always lead to a long term change of trend, they usually cause short term spikes. After the spikes, price recovers and moves in the direction it was suppose to move prior the events. The biggest move moves are seen when the two directions are the same – the long term price direction and the short term spikes caused by high volatile events. In this update, we will look at a high probability forecast. Let’s review the last update before that. The chart below was used.
This wave count is still valid until price breaks above 1.169. A break below 1.159 could confirm the bearish move down to 1.15 and below while a break above 1.169 could make for a much higher bullish correction or even a change of trend. We should also remember that wave 1 of (5) (a diagonal pattern) which ended at 1.15 could also serve as the end of the 5th wave supporting a strong bullish move above 1.185 resistance. There are high impact events coming later this week that will most likely define the next direction.
As included in the last update, Flat patterns are not very reliable in real time. This is another example. Price didn’t break below 1.159 to validate the flat pattern. It moved down a bit (above 1.159) and has now rallied above 1.169 to invalidate this forecast. The chart below shows the new update.
5-6 July EURUSD Elliott wave analysis: what next?
The chart above shows a double zigzag wave 2 which could form within a channel. The reversal zone for this pattern is 1.1737 – 1.1794. If this pattern would be valid, price should reverse at any price in between. If price gets to this zone, reverses and breaks below 1.172, we might see it go further downside and break below 1.15 to head to our 1.11 bearish target. In the other way, if price rallies swiftly above 1.1794, the chances are high that 1.185 resistance will be taken out. If this happens, we should see higher prices at 1.2. Price will soon choose its path. Stay tuned for the next update.
Do you have other views in contrast to the ones listed or you want to compliment them further? let’s know by your comment below.
Don’t forget to share this analysis with people that matter to you.