November 28, 2018 | AtoZ Markets- Euro dropped below 1.13 as the dollar gained grounds this week. The following looks at what could happen next based on Elliott wave theory.
EURUSD has continued last week's bearish move from 1.1470 to hit below 1.13 important price level. The dollar is gaining grounds after being boosted by the Fed hawkishness and the U.S trade stance. The Italy-EU face-off continues as Brussels might take disciplinary actions against Italy's trade deficit policy. The market will also look forward to today's US prelim GDP data for the 3rd quarter, which might cause short term big move if it comes largely above or below expectation.
From technical perspective, the drop from 1.1470 might be a correction of the 1.1215-1.1470 rally. After the year-long bearish impulse wave completed at 1.1215, the corrective nature of the immediate bullish push to 1.1470 meant that the 3-wave bullish correction that should follow will most likely be a flat pattern or one of the complex zigzags. Unless a dip below 1.1215 happens, the medium-term direction still points upside.
EURUSD Elliott Wave Analysis and Important Price Levels
In the last update, we looked at a zigzag pattern- wave (x) (in green) ending at 1.1325. However, the zigzag wave (x) was to be confirmed confirmed by a break above the zigzag channel. Price stayed within the channel and dropped below 1.13. Wave (x) is now extended (at 1.618% extension of wave (w)). The most important intraday price zone now is 1.1250-1.1350. A break above 1.1350 (breakout of the zigzag channel) might lead to price advancing to 1.15-5-1.16. Price might visit 1.1250 before the zigzag breakout. If the current drop continues below 1.1250, we might see a retest of 1.1215-1.12 support zone . A drop below the support zone would invalidate the bullish scenario and thereby make the drop from 1.1470 impulsive.
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