EURUSD is retracing to 1.15 after declining close to 1.143 support price level. It seems the bearish move will continue once the retracement completes.
October 2018 | AtoZMarkets – Yesterday, EURUSD quickly rallied to 1.155 but fell even more sharply nearing 1.143 support level. Today, however, the price is retracing back to 1.15. The current rally is expected to be corrective and stay below 1.15 in order for the bearish trend to hold its grip on the Euro. A break above 1.155 could hamper the bearish development and give a chance for the bulls to take their share up to 1.18.
In the last update, we had two scenarios having contradicting interpretations. There was one that identified the dip from 1.162 to 1.143 as the first wave of a potential bearish impulse wave projecting 1.13 as bearish target. The 1.155 bounce that preceded yesterday's decline was identified as the 2nd wave of bearish decline. Price drop from 1.155 further solidifies this forecast. However, price couldn't dig below 1.143 wave 1 low. Price will be expected to break below 1.143 without bridging 1.155 to keep validating this forecast. There was an alternative forecast based on traditional chart pattern. A combination of potential double bottom at 1.143 and a smaller head and shoulder pattern. the Price was expected to break above 1.155 for confirmation. The bullish breakout did not happen and the price dropped close to 1.143 to invalidate the head and shoulder. At this point, we can say the bears have higher advantage than the bulls.
EURUSD Elliott Wave Analysis and Important Price Levels
The Elliott wave forecast above continues the bearish impulse wave from 1.162. The 2nd wave completed yesterday at 1.155 and the price declined close to 1.143 to complete the 1st sub-wave (circled) of wave 3. The current bullish retracement might continue to 1.1495-1.151 before price declines further for the 3rd sub-wave. By projection, 3rd wave of this bearish impulse wave should continue to at least 1.13. This forecast will be invalid if the current rally breaks above 1.155. If that happens, the alternative scenario below might play out.
EURUSD Intraday Chart Pattern Analysis
Double bottom is a very popular reversal pattern among market chartists. Price's reluctance to break below 1.143 could end up completing a double bottom reversal pattern, with neckline at 1.161-1.162. A smaller double bottom can also be spotted with neckline at 1.155. If the Elliott wave bearish scenario gets violated with a break above 1.155 (smaller double bottom neckline), we might see a big bullish push with a break above 1.1610. The target for this scenario is 1.18. Chart patterns are often confirmed by breakouts above/below their necklines.
Which of these scenarios do you think will play out. Share other alternatives with us in the comment box below.