EURUSD resumed the bullish run from 1.088 after Wednesday’s FOMC announcements. The following EURUSD Elliott wave analysis October 31 update looks at what could happen next.
October 31, 2019 | AtoZ Markets – The Fed Reserve has cut down rates for the third consecutive time just as the market expected. EURUSD first responded with a fast dip to 1.1080 before it reversed and surged to 1.115. The quick price reversal was triggered by the Fed’s decision to pause its ‘rate cut’ spree and wait for upcoming data for the next action. Meanwhile, EURUSD resumed bullish on Thursday during the Asian session and early in the London session to hit 1.1175. However, it has gone a bit silent and a minor dip might follow before advancing higher.
The market will now focus on the US employment data on Friday to decide how the week will end. It is currently very close to the 1.1180 resistance level. Unless something shocking happens, the currency pair should hit above 1.1180 toward 1.125-1.13 resistance zone.
EURUSD Elliott wave analysis October 31 update
From the Elliott wave perspective, we have been looking at two scenarios. We interpreted the rally from 1.088 to 1.118 as both corrective and impulsive. After the price dipped to 1.11-1.106 support zone, we believed a break below would mean that the long-term bearish trend will resume below 1.088. However, if the price bounced off that zone, we should see it advance toward 1.125-1.13. In the last update, we used the chart below for the first scenario.
The moment it surged above the zone, it was evident to a small degree that the scenario above had a higher chance of making it. We can now say that wave iv of (iii) ended at 1.1070 and wave v is in motion. However, a closer look suggests the wave iv dip from 1.1179 is probably too big compared to wave (ii) unless wave (iii) is going to be overly extended. While we will keep this wave count as a possible scenario, the following EURUSD Elliott wave analysis October 31 suits the current market situation better.
The chart above shows that wave (iii) ended at 1.1179 (more than 161.8% projection of wave (i) from (ii)). The current rally from 1.1073 is wave (v) and by projection, has a reversal zone at 1.125-1.1275. Although the price might hit 1.13, however, the bottom line is that we will be expecting a bearish correction around that zone.