EURUSD has continued the recovery from 1.088 to hit its highest price since late August. The following EURUSD Elliott wave analysis October 18 update looks at what could happen next.
October 18, 2019 | AtoZ Markets – EURUSD extends above 1.11 for the first time since late August. The EU has had an agreement with the UK on Brexit. This could have cleared the uncertainties and attracted more EUR bulls. This also came on the back of weak US data. The Philly Fed Manufacturing Index and US Crude Oil inventories all came disappointing. The USD slumped across the board on Thursday as a result. EURUSD price hit 1.114. Meanwhile, the currency pair has been silent today but still remains above the 1.11 handle. The EU summit continues today. It remains to be seen whether the price will extend the current recovery to 1.125.
Although the current surge looks good for the Euro, the currency pair still remains in the bearish territory. In addition to this, the EURUSD price pattern from 1.088 looks corrective. If the price drops quickly below 1.11, the long-term bearish trend might just continue toward the 1.1 and 1.088 support levels. To the upside, if the bulls push higher, 1.125 and 1.141 are the next resistance levels to watch out for. Speculations about the parliament Brexit vote could rock the market. The market will also look forward to the ECB monetary policy statement and press conference next week.
EURUSD Elliott wave analysis
In the last update, we looked at a triple zigzag pattern emerging from 1.088. Therefore, we expected the recovery to continue to 1.11 or prices around it. The chart below was used.
The price hit 1.11 and pierced a bit above it to complete the triple zigzag corrective pattern. A bearish reversal pattern might lead to a fast fall at this point. One is emerging at 1.114 as the new chart below shows.
The chart above shows the EURUSD Elliott wave analysis October 18 update. At 1.1140, a double top reversal pattern is emerging. This could be the reversal pattern needed for the confirmation of the triple zigzag corrective pattern. However, it’s important to wait for the price to drop below 1.11 psychological level, followed by a pullback and a continuation. Finally, a dip below the triple zigzag (blue) channel will all but confirm the return of the bearish trend. Ideal targets are 1.094, 1.088 and 1.07. On the other hand, if the resurgence continues above 1.116, the triple zigzag will become overstretched and perhaps invalid.