EURUSD analysis: price drops on mixed Euro-zone data

EURUSD dropped to 1.125 following mixed Euro-zone data. The following share insights based on Elliott wave theory.

April 18, 2019. AtoZ Markets - Germany's Manufacturing PMI dropped to 44.5 points, below expectation. Similar data from France came better than expected at 50.5 but most of the other PMIs from the region came weaker than expected. EURUSD in reaction tanked and broke below 1.128 technical support level to hit 1.125 for the first time in over a week. The market will look forward to the upcoming US retail sales data for more short term direction clues. If the US retail sales and core retail sales come better than expected with a wide variation, EURUSD should dip further toward 1.12 and below. If the data come worse, a retest of 1.128 will happen.

Prior to the Euro-zone PMIs, EURUSD started close to 1.13 and was quiet in the Asian session. Price already formed a reversal double top pattern at 1.1325 after completing a corrective structure. The break below 1.128 has probably confirmed price commitment to the downside. However, a retest of 1.128 might happen before it dips further. We will see what happens after US retail sales data. The short term market sentiment still point downside unless a fast break above 1.1325 happens.

EURUSD Elliott wave analysis and important price levels

In the previous updates, we monitored the rally from 1.1185. The upsurge was expected to be corrective as one last dip below 1.1175 low was expected. From Elliott wave perspective, the over 13 months bearish impulse wave is close to completion with a 5th wave diagonal.

In the last update, we confirmed the possible corrective wave pattern of the rally from 1.1185 to 1.1325 to be a double zigzag pattern. To prove further the likelihood of a fast drop, price was printing a double top pattern at 1.1325 with the neckline at 1.128. The chart below was used.
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The break below 1.1280 happened very fast and EURUSD is now trading at 1.125. Is there room for move downside move?

The dip is expected to continue to 1.16 bearish target level where the diagonal 5th wave could end. There might be a minor bounce at 1.1225 to retest 1.128 level. If the price moves as expected, a large bullish correction could start at 1.15-1.16 price zone.

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