EURUSD Elliott wave analysis: price drops to 22-months low


EURUSD has dropped to its lowest price in the last 22 months. The following technical insight is based on the Elliott wave theory.

April 25, 2019. AtoZ Markets – Euro-dollar price dropped below 1.1130 on Thursday hitting its lowest in about 22 months. Prior to this time, the currency pair has not gone lower than this since June 2017. The Dollar continues to lead the way among the currencies with others falling flat behind it. The fundamentals from the Euro-zone have not been looking good with the latest being a weak German IFO data. The near-term direction still points to the downside after breaking below the 1.1175 support level reached in early March. The US Durable Goods Orders come next as the Euro catches its breath. 

From a technical perspective, the price has reached a level where we could see a big bounce. The price has been quiet so far today looking for more clues. It’s really not good catching a falling knife but there are chances that price is oversold and a big rally will follow especially if there is a clear reversal pattern formed at the current price level. Currently, there are no reversal patterns yet and the price is digging deeper. In the previous updates, we noted a reversal zone at 1.115-1.116 after the price dropped below 1.128 support. Despite the price dropping below this zone, the initial price pattern is not violated yet. At what price will it become invalid?

EURUSD Elliott wave analysis and important price level

The current bearish trend started in January/February 2018 and has extended to 22 months low. At the end of an impulse wave in one direction, a 3-wave correction is expected in the other direction. EURUSD is completing the 5th wave with an ending diagonal pattern. Price has gone below the expected reversal zone but the diagonal pattern is still valid. 

Price has completed the diagonal and currently at the 78.6% (1.114) Fib-projection of wave (iii) from (iv). The diagonal will become invalid at 1.105. Price is still at a reversal zone within the context of this outlook. A 3-wave bounce toward 1.18-1.21 is very much possible until a break below 1.105 happens.

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