EURUSD has dropped to 1.125 making its lowest price in the last two weeks. The following give technical insights based on Elliott wave theory.
March 27, 2019. | AtoZ Markets - The dollar has been upbeat today after positive trade balance data. EURUSD has now dropped below 1.1250 for the first time since 12th March. After last week's Fed dovish comments sent the currency pair to 1.1450, it has continued the immediate drop that followed which has now resulted in a 200 pips dip.
EURUSD Elliott wave analysis and important price levels
Price is still under a big bearish pressure which could continue below 1.1175 to hit a new March low. According to the Elliott wave count that we reviewed in the last update, the bearish impulse wave that started last year is about to end. The 5th wave is completing with an ending diagonal pattern. The ending diagonal, which started at 1.183 in late September 2018, is leading a 600 pips dip. The pattern is completing the final leg with two sub-legs left to complete as the chart below, used in the last update, shows.
Ending diagonal patterns have 5-waves with each made of a zigzag or complex zigzag pattern. Wave a of (v) was expected to be supported at 1.1245-1.123 intraday support zone before a wave b bounce. This wave count is still valid and quietly fits the current market condition. However, as price covers more ground, it is open to more subjectivity. A dip to 1.116 will very much likely happen before the price starts a big bullish correction to 1.18-1.21. The chart below shows the two most likely scenarios.
The 5th leg of the diagonal could end with a simple zigzag or any of the complex zigzags. This fact should open our mind to accommodate these possibilities. The chart above shows the two most likely scenarios. The first scenario (all waves and sub-waves in green), looks at the possibility of a double zigzag 5th leg. This means that the current dip will continue below the current intraday support zone between 1.1244 and 1.123. The diagonal pattern could therefore complete at 1.116-1.1165 zone or its neighborhood.
The second scenario ( all waves and sub-waves in red), shows a simple zigzag pattern. The drop from 1.145 is completing an impulse wave a. Price should bounce for wave b to retest levels above 1.13 before dropping for wave c. The second scenario will take a longer time to complete. However, the two scenarios pointed closely to the same reversal zone of 1.1155-65. Will there be a big upsurge as expected? Time will tell.
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