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EURUSD Elliott wave analysis ahead of the big week

Sanmi Adeagbo | Sep. 9, 2019
EURUSD Elliott wave analysis ahead of the big week

EURUSD remains above 1.1 ahead of the ECB monetary statement this week. The following technical analysis is based on the Elliott wave theory.

September 09, 2019 | AtoZ Markets - EURUSD broke upside last week above the 1.1025-1.105 zone. At the end of the week, price retraced below 1.1025 but is now trading within the zone. The US NFP came worse than expected but the change was minimal on this currency pair as it rallied to retest 1.105. Meanwhile, during the Asian session today, the price dropped below the 1.1025 base but the London market has come with some bullish traction to support a bounce back into the zone. However, the validity of 1.105-1.1025 as a support zone is getting weak as the price breaks it back and forth.

EURUSD is expected to be volatile this week. It's the ECB week. The European Central Bank will reveal its monetary policy to support the Euro-zone economy. More easing statements are expected to keep the Euro afloat with the current political atmosphere looking unfavourable.  Anyways, the market will be looking for any excessive hawkish and dovish tone in the new policies and during the press conference. The USD, on the other hand, is currently weakening against the majors after the August NFP came disappointing and the US-China trade war noise coming down a bit. Furthermore, the market will look for short term clues when the high impact news which include the Crude Oil Inventories, the CPI and the Retail sales data are released later in the week. 

EURUSD analysis: important price levels

Price is currently violating the 1.1025-1.1050 zone. The new support level is now at 1.092. If the current bullish correction will continue, the price should stay above 1.092 and rally toward the 1.1165 resistance level. Higher resistance levels at 1.125 and 1.141 are potential bullish target levels if the price pushes further upside.

EURUSD Elliott wave analysis

From the long-term perspective, we admitted that EURUSD was very close to returning upside after it completed an ending diagonal 5th wave (although a bit more stretched than necessary) of the bearish impulse wave that started in January 2018. The last week bullish rally to 1.1080 was the first trigger needed. In the last update, the chart below was used.

Price was expected to break above wave (v) trendline. However, a dip happened instead. The new chart below shows the wave analysis of the rally from 1.092.

From 1.092, we have started a count expected to lead to a 3-wave long term bullish correction to 1.18-1.21. A break above the wave ii channel and above 1.1085 is expected to be followed by further surges to 1.125 and 1.141. On the other hand, the price might just be planning a 3-wave bullish bounce toward 1.125 before resuming downside. Meanwhile, these two scenarios will only work out if the current dip does not continue below 1.092 support level.

Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.