EURUSD is recovering toward 1.1. The following looks at what could happen next based on the Elliott wave theory.
September 02, 2019 | AtoZ Markets – The Euro-dollar currency pair is consolidating at prices below 1.1. The pair dropped to 1.096 on Friday to mark its lowest price since May 2017 bullish breakout. In the Asian session today, price oscillated between 1.0993 and 1.0985. In the early London session, it dropped 10 pips below this range. There is a clear lack of momentum so far but the market is expected to react to high-impact fundamental news coming later in the week.
This pair might be a bit silent today due to the Bank holiday in the US to mark the Labor day. The Euro-zone is still not looking buoyant enough and the market will eye strong triggers from the ongoing German and Italian politics together with the Brexit whose outcome is still uncertain. The Euro-zone will release the low-impact PMIs today. The biggest economic news this week is coming from the US with the Friday’s Non-Farm Payroll and other employment data topping the list.
EURUSD analysis: important price levels
Price eventually broke below the 1.1025-1.1050 zone on Friday. This zone is expected to act as the nearest resistance level if the price returns upside. A breach of this zone to the upside might cause a hit of the 1.1165 and 1.125 resistance levels. To the downside, a break below 1.095 level will open the price to 1.105 long term support zone with very little barriers on the way.
EURUSD Elliott wave analysis
From the long term perspective, EURUSD has completed an impulse wave which started in January 2018. The 5th wave is completing an ending diagonal pattern which will become invalid if the price hit 1.095. If this wave pattern is not invalidated and the price responds with a bullish breakout, we would expect a 3-wave correction toward 1.18. However, at the moment, the price has not shown a serious commitment to the upside. The new chart below shows that price is a bit unchanged from what we had in the last update.
A break above the wave a)-b)-c) of v is expected to trigger the start of the bullish correction to 1.178-1.1968. It remains to be seen what will trigger this as it currently goes against the current political and economic indicators. However, events can change in the twinkle of an eye. On the other hand, a dip below 1.1095 will invalidate this setup.