EURUSD Elliott Wave Analysis: Euro Volatility Drops Ahead of Brexit Votes

EURUSD still trades below 1.15 ahead of Draghi's speech and Brexit votes. The following looks at the technical side based on Elliott wave theory.

January 15, 2019 | AtoZ MarketsEURUSD continues below 1.15 but was lacking enough momentum to sufficiently drive below 1.1475-1.15 support zone. The market expects today's Brexit votes to yield big moves for GBP pairs including EURGBP. The Brexit motion is expected to be rejected by a very wide margin. The market will most likely price in to this effect if Prime Minister May loses as expected. ECB president Draghi, is set to testify on the bank's 2017 annual reports today. With these two events, the Euro market might not be short of volatility today. Price needs to break below the current support zone to drive a move to 1.13 or below.

Last week, EURUSD completed a corrective pattern that started at 1.1215. The pattern ended at 1.1575 and has dropped more than 120 pips to stay sideways within a support congestion zone. This currency pair was silent yesterday, oscillating between 1.149 and 1.145. There was a strong support zone at 1.1475-1.15. Though currently at 1.1455, 20 pips below this zone, there has still not been enough volatility to drive price far downside. That may not be lacking today.

EURUSD Elliott wave Analysis and Important Price Levels

In the previous updates, we started a bearish impulse wave count from 1.1575. The chart below was used int he last update as we continued the wave count with an expectation of a drop to 1.13 or even below.

Away from 1.1475-1.15, price will need a strong drive. This wave count is still valid until a break above 1.1575 top happens. if it moves as expected, a dip to a new low could very well happen. The chart below shows a chart reversal pattern emerging after price completed the wave corrective pattern at 1.1575.

From 1.1575, price has been falling gradually, making lower highs at 1.1575, 1.154 and 1.1490. A head and shoulder pattern has completed as a result of this price behavior, with neckline at 1.1450. A break below 1.1450 will most likely lead to a free fall toward 1.13. A break above 1.1490 and 1.154 is not good for this bearish scenario.

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