EURUSD dropped below 1.12 to hit the 1.118 support level. Will price dip further? The following technical insight is based on the Elliott wave theory?
July 23, 2019 | AtoZ Markets – The Euro-dollar currency pair has continued the bearish run after dropping below the 1.12 critical level. The 1.12-1.118 support zone has been held since June. It has been tested three times over the last one month. Eventually, a break below will happen and this currency pair will drown further to prices below 1.11. There are no strong economic data to watch out for today thus any bullish correction is expected to be limited below the 1.1285 resistance level. Traders might be cautious ahead of the ECB rate decision on Thursday and the US Advanced GDP data to be released on Friday.
EURUSD analysis: important price levels
The critical levels above and below the current price have not changed. Below the 1.118 support level, there is the 1.11 critical support level and the 1.105 diagonal support level. To the upside, 1.1185 and 1.1142 are the nearest resistance levels. If they give way, EURUSD should return to 1.152 and 1.157 critical levels.
EURUSD Elliott wave analysis
The trend remains bearish. However, it’s closer to a bullish reversal than ever since the trend started in January 2018. A bearish impulse wave is close to completion with an ending diagonal 5th wave as shown in the last update with the chart below.
If the diagonal ends as expected, EURUSD will drop to 1.105 or even 1.1025 before a bullish correction follows to 1.18-1.2. Wave (v) of the diagonal has completed its first leg and perhaps the 2nd leg after last week push to 1.1285. The chart below shows the internal waves of wave (v).
The wave analysis of the last leg of the diagonal is playing out well. Ending diagonals according to the Elliott wave theory, are motive waves with corrective sub-waves ending like a wedge formation. The bigger picture of the ending diagonal can be seen on the daily chart above. In the new chart, wave a-b seem to have completed at 1.1192 and 1.1285 respectively. A 5-wave dip is expected to complete wave c. The price might still make a minor rebound from 1.118 to 1.123-1.125 before it finally slumps further to the 1.105 target.