EURUSD Elliott wave analysis: minor bounce likely to retest 1.1350

EURUSD is pulling back, supported at 1.13. What next? The following give insights based on Elliott wave theory.

March 05, 2019 | AtoZ MarketsEURUSD is still under the bearish pressure after breaking below the 1.135-7 support zone on Monday. The Euro-zone PMIs came better than expected and the price which is now being supported at 1.13, could be lifted toward 1.135 in the short term.

The dollar is gaining ground across the board unfazed by the optimism surrounding the US-China trade deal. Positive news often drives the greenback downside, but the buck has bucked up ahead of Friday’s non-farm payroll data. Once the road is clear for the Dollar, sellers will drive this currency pair below 1.13 and 1.1215. The Euro-zone is not doing any better with an economy slowing down to 0.2% QoQ in the last two quarters.

EURUSD closed on Monday below 1.134 after a quick rally from 1.1309. Price dropped in the Asian session today and continued into the London session to hit 1.1315 before pushing slightly upside. The bounce from 1.1309 is likely to continue to make a retest of 1.135, a support level that turned resistance.

EURUSD Elliott wave analysis and important price levels

The EURUSD wave pattern is clear. The rally from 1.1235 to 1.142 completed a corrective pattern – a correction of the impulse wave dip from 1.1515 to 1.1235. At the end of the corrective pattern at 1.142, two price technical reversal patterns completed and price broke their ‘necklines’ downside. Let’s look at them again in the chart below used in the last update.

After the double zigzag corrective pattern ended, price signaled a reversal after completing a wedge/diagonal and ‘head and shoulder’ patterns. The EURUSD price dipped and hit close to 1.13. What next?

There was a bounce off 1.1315 intra-day support. A retest of 1.135 or below is very much high in the cards. It remains to be seen whether the price will rally into the ‘head and shoulder’ territory of 1.136-1.142 before finally dropping below 1.13. The selling pressure should continue below 1.13 to 1.1215 or even below unless the bearish patterns turn invalid above 1.142.

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