EURUSD rallied upside early in today's London session. It quickly gained close to 40 Pips and hit 1.1550. However, it couldn't hold on to the early gains as it drops back to 1.15.
October 2018 | AtoZMarkets – EURUSD was bearish last week, dropped to 1.144 after being resisted at 1.162. The drop from 1.162 looked impulsive and broke below 1.15 handle. Price visited 1.143 which was the next support level after 1.15. A break below was expected to see it off to 1.14 and 1.13 handles. However, 1.143 held as a strong support level and price rallied back above 1.15 before it finally closed the week around 1.1515. At the beginning of this week, price was silent during the Asian session but there were fast moves during the London session as price quickly gained and moved 50 Pips above 1.15. The rally didn't last as price drop to 1.15 and looking to go below once again.
In the last update, we expected the fall from 1.162 to continue to 1.143. Price was held above 1.143 to complete the bearish impulse wave from 1.162. The price bounce from 1.143 can be identified as the bullish correction of the 1.162-1.143 dip as the chart below shows.
EURUSD Technical Overview and Important Price Levels
The rally from 1.143 to 1.155 looks corrective. However, it's not very certain that the correction is over as wave C (circled) looks much smaller than its corresponding wave A (circled). The current dip from 1.155 looks assured. If the next intraday rally from the current price level is corrective and stays below 1.155, a big bearish breakout could happen below 1.15 to retest 1.143 again. A break below would most likely end up at 1.135-1.13 bearish targets. There is an alternative technical view outside of the Elliott wave scope, which shows a bullish likelihood. If price breaks above 1.155 fast, the following scenario might play out.
EURUSD Analysis: Double Bottom + Head and Shoulder Pattern Bullish Signals?
Price's reluctance to break below 1.143 and the fast bullish move that follows to 1.155 is critical of a reversal. There is the possibility of a double bottom reversal pattern with neckline at 1.161-1.162 and a smaller head and shoulder pattern within. If price breaks above 1.155, we might see it continue to 1.161-1.162. A break above 1.162 will most likely hit 1.18 bullish target.
Which of these technical forecasts do you think is more likely? Share your thoughts in the comment box below.