EURUSD clusters around 1.1250-1.1260 with more bearish tendencies. The following looks at what could happen next based on Elliott wave theory.
February 14, 2019 | AtoZ Markets – Euro has continued the sell-off across the board as EU’s currency continues to feel the effect of the Eurozone economic imbalance. EURUSD, the most traded currency pair, has slumped further since it topped at 1.1515 late January. Price dropped from 1.1340 yesterday by 50 pips to hit below 1.13 and has remained stabilized around 1.125-1.126. There is high tendency that price would drop to at least 1.1215 support before a corrective bullish run. Later today come the US retail sales and PPI data.
Since January, it was clear that EURUSD will most likely continue the 2018 bearish trend. The run that started late 2018 from 1.1215 was corrective. The correction eventually ended at 1.1570. At the end thereof, a 5-wave bearish impulse wave was expected to follow below 1.1215. It seems that will still be the case in the coming weeks. The first two wave of the expected bearish impulse wave from 1.1570 have completed. The current run is the third wave of this degree.
EURUSD Elliott Wave Analysis and Important Price Levels
In the last update, the chart below was used. A 5-wave dip on the way to 1.13. A 4th wave rally was expected above 1.13 (1.134-1.135) before the bearish trend takes price toward 1.1215 to complete the impulse wave.
Once this impulse wave was complete, a 3-wave correction was expected to follow upside. The chart below shows what happened afterwards and what should be expected next with respect to Elliott wave theory.
Price did rally to 1.134 to complete the 4th wave of this degree and continued downside to 1.1250. However, the 5th wave was expected to drop below 1.1250 to hit 1.1215 important support level. The retail sales data came (as of the time of writing this report) negative for the Dollar and greenback was seen weakened across the board. A break above 1.1343 would confirm that the bullish run from 1.1515 has ended, albeit truncated. The rally could extend to 1.14-1.145 before another price crash which should see price far below 1.1215. Alternatively, if price holds below 1.1343, a dip below 1.1250 will continue the 5th wave to 1.1215 or even below before the corrective rally starts