Ahead of the ECB rates decision this week, EURUSD rallies above 1.12 as the bearish trend persists. The following technical insight is based on the Elliott wave theory.
June 22, 2019 | AtoZ Markets - EURUSD failed to consolidate on the bullish run toward 1.1285 last week. The price, however, dropped quickly to the 1.12 handle before the close of trading last week. At the start of this week, the Euro-Dollar currency pair rallies slightly above 1.12 and is currently lacking enough bullish momentum to push further upside. A touch of 1.125 could happen before further crashes toward 1.11 if price breaks below 1.119 support level.
There are no high-impact economic events in the calendar today. Meanwhile, the short term fate of the Euro could be decided on Wednesday and Thursday when the Euro-zone PMI data will be released and the ECB rates will be decided respectively. Price remains in the bearish territory thus any more dovish tone from the political bloc will force more sell-off on the Euro and drag EURUSD toward 1.11. The US GDP q/q will be released on Friday. It sure will be a big week for this currency pair.
EURUSD technical analysis and important price levels
To the downside, if price breaks below the 1.118 support level, further dip to 1.11 and 1.105 is very much likely. To the upside, a break above 1.1285 might give the price room to test the 1.1412 critical level before breaking toward 1.145, 1.152 and 1.157 resistance levels
EURUSD Elliott wave analysis
The trend is still bearish. It has been since January 2018 when the current bearish impulse wave started. In the last update, we looked at the short term price forecast which also pointed downside as the chart below shows.
Price continued downside and hit the 1.12 handle again. A minor rally to 1.125 before price crashes to 1.105-1.11 is high on the cards. Let's look at the bigger picture of how the impulse wave from January 2018 has progressed.
The long term wave analysis above shows the bearish impulse wave from January 2018 is in the last stage - 5th wave. The 5th wave is emerging into ending diagonal. The ending diagonal started in September thus taking more time than the other two actionary waves - wave 1 and 3 (circled). A break below 1.119-1.118 support zone would trigger further fall with bearish targets at 1.105 and 1.1025. A 3-wave bullish correction could then start and run throughout the rest of the year.