The market mood changes quickly as a result of the US-China trade headlines. The following EURUSD Elliott wave analysis looks at what could happen next.
December 02, 2019 | AtoZ Markets – EURUSD has built on the bullish end of the last week. The currency pair gained significantly as a result of a weak greenback. The buck tanks as the new week start properly due to the new turn the US-China trade conflict is taking despite last week upbeat mood. EURUSD is now heading toward the 1.105 resistance level after a minor dip to retest 1.1 early in the London session.
The current news from the US-China trade war is sparking some risk-off sentiments in the market. China is reported to be planning retaliatory moves against the US after the latter’s interference in Hong Kong politics. Money flow is, therefore, returning to risk-off assets. However, the USD plunged throughout the European session, therefore, lifting EURUSD farther from the 1.099 support level. The EURUSD is also buoyed by a better than expected Spanish Manufacturing PMI data. ECB President Lagarde is next in line before the ISM Manufacturing PMI data from the United States.
EURUSD Elliott wave analysis
Technically, EURUSD was preparing for a resurgence after the price floated above the major intraday support level last week. The price should advance to the 1.105 resistance level at least before the market decides on what next to do. If breached, a visit to the 1.11 handle is high on the cards. In the last update, we counted a 5-wave dip from 1.11 toward 1.099 support and then expected a possible 3-wave bullish correction around the 1.099 support ( Charting tools are from TradingView).
We expected a 3-wave correction once the 5th wave completed. The new chart below shows the 3-wave bullish correction is happening as expected. We will now have to see what will happen next. The long-term trend remains bearish and we might see a return to the downside later.
If the market slows down around 1.105 and completes a bearish reversal signal, the bearish trend from 1.11 might continue. On the other hand, a quick surge above 1.1050 might lead to a retest of 1.11 and an eventual breakout. After 1.11, the next attractive price level is at 1.125.