EURUSD is trading a bit above 1.13 ahead of the German ZEW Economic Sentiment. The following give insights based on Elliott wave theory.
April 16, 2019. | AtoZ Markets - The Euro-dollar currency pair is climbing steadily and has formed a narrow range just above 1.13. The ECB meeting last week saw price dropped to 1.123 but that couldn't be sustained as it returned upside to make a new high in almost three weeks. The FOMC came with not much surprises as the dollar stayed quiet. The currency pair is trading between 1.129 and 1.132 early in the London session after gaining up to 140 pips this month from 1.1185.
Fundamental events to watch out for
The German ZEW economic sentiment data came better than expected but the currency pair has broken below the range instead. FOMC member Bullard will speak on Wednesday. On Thursday, the Euro-zone services and manufacturing PMIs will be released and the U.S core retail sales data will come hours after. These are the high impact economic data this week, which could cause short-term deflections. However, overall, EURUSD is making a correction to the upside. The chances are high that a fast dip to 1.115-1.116 could happen once the bullish momentum finally runs out of steam.
EURUSD Elliott wave analysis and important price levels
From the Elliott wave perspective, EURUSD is at the verge of a big bullish push toward 1.18-1.21. However, the bearish trend might continue beneath 1.1175 support before the bullish correction starts. The bearish impulse wave which started in January-February 2018 is completing the 5th wave with an ending diagonal pattern. The diagonal is in its own 5th wave which is expected to be a 3-wave corrective pattern to the downside. In the last update after last week's ECB and FOMC meetings, the chart below was used.
A break below 1.12 was required to confirm the end of wave x at 1.1288. However, the price stayed above 1.12 and would soon return upside to hit above 1.13 but the wave pattern is unaltered yet as the updated chart below shows.
The chart above shows the diagonal 5th in its entirety. Wave (v) has completed the 1st leg above 1.1175 and is about to complete the 2nd leg. A break below the channel should lead to further drops to 1.116. Buyers will be waiting at this level to spot buying opportunities especially if there is a clear technical reversal pattern.
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