EURUSD has started downside this week ahead of ECB meeting on Thursday. The following technical insight is based on Elliott wave theory.
March 04, 2019| AtoZ Markets – The Dollar gained traction to the upside last week as it recorded gains across other majors. EURUSD took time to form a series of technical reversal patterns at 1.14-1.144 reversal zone. The key risk for Euro this week is the ECB meeting on Thursday when the bank will revise its economic projections. The market expects a negative/dovish forecast as the Euro-zone economies have not done well since the turn of the year. The US-China trade deal optimism could be positive for the Dollar as it hits higher prices but traders will also have their eyes on the US employment data coming on Friday.
Euro has started this week European sessions on the downside as price broke below the 1.137-1.135 support belt. In the last days of last week, USD gained across the board except for the EURUSD which tried thrice and did not solidify its bullish hold. Eventually, the price dropped below 1.14 and completed a series of bearish technical reversal patterns which showed that a dip might be on the way. Price has now dropped to 1.134 as of the time of this report. We would most likely see further price dips this week with targets at 1.13, 1.1235 and 1.1215.
EURUSD Elliott wave analysis and important price levels
In the last update, we identified the corrective rally from 1.1235 to have completed a zigzag pattern. The last leg was an ending diagonal before a break below 1.14 happened. Prior to that, we had identified a price reversal zone at 1.14-1.144. The ending diagonal completed at 1.142 which fell within the reversal zone. The chart below used in the last update explains better.
After the breakout, a pullback often happens. We expected ''a bit of retracement to 1.138-1.14'' before the drop continued. Price did that exactly, rallied to 1.14 and has now continued below 1.135. Here is the new update.
Aside from a double zigzag corrective pattern and a wedge/diagonal top at 1.142, there is now a head and shoulder pattern. All these patterns are reversal patterns used to identify the end of a trend or correction. It now seems price would continue downside. A break below 1.1315 intra-day support would see the price at 1.1235 and 1.1215 in the near-term.
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