EURUSD almost hit 1.12 on Wednesday at the start of the London session. The following technical insight is based on the Elliott wave theory.
July 17, 2019 | AtoZ Markets – The Euro-dollar currency pair has continued the bearish run from 1.1412 and is currently close to hitting the 1.12-1.118 support zone after two previous failed attempts. Last week, the price bounced from this zone after completing an intraday bearish trend. The long term trend remains bearish and it looks very much likely that the price will break below 1.118 to make a new low since early June.
There are no high impact fundamental events on the economic calendar today that could cause big spikes on this currency pair. The pair is thus expected to be primarily driven by the broader market sentiment which remains bearish from both the long term and intraday perspectives. A break below 1.118 will lead to further dips to 1.11 or even 1.10. On the other hand, if the price is again supported at 1.12-1.118, a bounce to 1.135 could happen. A surge above 1.14 might invalidate the bearish scenario and resume a long term bullish correction which started from 1.11. There are resistance levels at 1.145, 1.152 and 1.157. These levels seem far-fetched with the current price activities until the bearish trend is confirmed to be over. The price will give more clues in the coming weeks.
EURUSD Elliott wave analysis
From the perspective of the Elliott wave theory, the long term bearish trend from January 2018 is not yet complete. Perhaps a better way to put it is that the bullish correction that supposed to follow from 1.11 is not coming up well. In the last update, the chart below shows how EURUSD was expected to move.
After a 5-wave dip to 1.119, a 3-wave bullish correction was expected to 1.13-1.133 before the bearish move continues. The bulls couldn’t push to this price zone before the price was dragged toward 1.12. The chart below shows wave b could have been over.
EURUSD is expected to break below 1.118 and drop toward 1.10 to complete the long term bearish impulse wave. A little bounce toward the intraday trendline could happen before the expected dip. If price breaks above the trendline, it means wave b will take one more leg to 1.133-1.135 before it resumes the bearish trend.