EURUSD rallied quickly to 1.117 before settling at 1.116 but price still points downside. Will there be a big upsurge? The following insight is based on the Elliott wave theory.
April 29, 2019 | AtoZ Markets - The market had a mixed reaction to the US GDP on Friday. A rapid rally was quickly followed by a bigger dip and the USD has posted a net loss across the board. EURUSD dropped quickly to 1.1105 and was close to violating a bullish reversal pattern. However, a recovery quickly followed as the USD dropped significantly. EURUSD rallied from 1.1105 to 1.117 lying below the 1.1175-1.1185 significant resistance zone.
EURUSD started today just below 1.115. It rallied to 1.116 and is currently dropping back to 1.115. Price is expected to continue to 1.113-1.114 before a new bullish breakout happens. Meanwhile, there are no high-impact economic news expected today.
The current price level is expected to be a hard-fought one between the bulls and the bears. While price stays below the 1.1175-1.1185 zone, it has also recovered to a bullish reversal zone at 1.115-1.116. Unless a fast dip below 1.1105 happens, the current recovery could continue to 1.1132 before flying to 1.18 as part of a long term bullish correction.
EURUSD Elliott wave analysis and important price levels
EURUSD price chart is very clear - a bearish impulse wave that has lasted for over 14 months. The impulse wave pattern has completed an ending diagonal 5th wave. An impulse wave completing with an ending diagonal is a strong signal for the start of a correction or change of trend. By extension, if price makes a 3-wave correction in this case, we will have it entered the bullish phase for the best part of 2019 Q2 and Q3.
In the previous updates, we highlighted 1.115-1.116 as the reversal zone. Price dipped below. However, the 5th wave diagonal would only be violated at 1.105 as explained in the last update with the chart below.
The chart above indicated that if price breaks above the wave x-y falling channel, it would have confirmed the end of the 5th leg of the ending diagonal. A big surge could then happen afterwards. The breakout has not happened yet. The chart below shows a much lower time frame.
A bottom could have been reached at 1.1105-1.111. A new bullish impulse wave is underway. The current dip should end above 1.113. The next bullish breakout above 1.1175 afterwards would be the confirmation needed for a big rally to 1.13, 1.145 and even higher.