EURUSD broke above 1.15 resistance level yesterday and gained about 75 Pips above it after Fed's dovish acts on Wednesday. What next? The following give insights based on Elliott wave theory.
January 10, 2019 | AtoZ Markets - EURUSD is returning from 1.1575 after a 85 Pips bullish run that lead to the break of 1.15 resistance level.The move was particularly fueled by Fed's dovishness on Wednesday. Yesterday's FOMC meeting opened the door for a rate cut. The rally increased Euro's gains this week over the Dollar to 1%. The Dollar is making slight recovery in the London session today and if this continues, EURUSD might dip to 1.15 or below it.
In the previous updates, there were two scenarios measuring price's advancement from 1.1215. There were two clear corrective wave patterns which had high likelihood of playing out. The market has not gone downside enough after yesterday's bullish run though the price pattern formed suggest a price roof at 1.155-1.16 might act as a resistance zone. Price is currently dropping from the mid-way of this zone at 1.1575 and might just continue downside - first below 1.15 and then toward 1.13. The first scenario was invalidated with yesterday's break above 1.15. The chart below was used for the second scenario on 3rd January.
This scenario is playing out quite well. If the rally continues above 1.16, this will also be invalid. The wave setup above looks quite corrective. Price has high likelihood of continuing downside below 1.15, 1.13, 1.127 and 1.1215 support levels. The chart below shows he new update.
EURUSD Elliott wave Analysis and Important Price Levels
The corrective structure stays within a fairly uptrend channel with its current peak at 1.1575. The dip from 1.1575 is expected to continue downside if the correction has actually ended. A bearish impulse wave down to 1.1215 is very likely. A dip to 1.15, followed by a corrective rally to 1.1535-1.155 could happen to complete the first two minor waves of the expected bearish run. A dip below wave i (in blue) is a good place to consider shorting targeting first 1.13 and then 1.1215. A rally back to 1.16 would invalidate this forecast and turn price further upside.
Please share your thoughts with us in the comment box below.