EURUSD rallied to 1.12 to hit its highest price in over a week amid the ongoing US-China trade war. The following looks at the technical side from the perspective of Elliott wave theory.
May 27, 2019 | AtoZ Markets - The trade war between the US and China is weighing heavily on the buck as it weakened across the board last week. The Euro is holding its ground and looks stable in the midst of a mixed EU election. EURUSD which was about to break below the 1.11 low last week quickly surged as a result of the USD weakness and hit 1.12 in the process. The currency pair was at the brink of completing the bearish trend that started in 2018 from a technical perspective but the overwhelming strength of the Dollar and the persistent economic struggles in the EU kept it rooted to the downside. Is the bearish trend over now? Will there be a bullish correction that will continue to 1.18-1.21?
Meanwhile, the price started the week bearish with a slight retracement below 1.12. The dip might continue to 1.116 and 1.115 before the bull extends further. The US-China trade war remains the biggest risk before the US GDP data coming later this week. EURUSD price has completed a double bottom pattern at 1.11 and it seems further push to the upside will happen as the pressure mounts on the Dollar.
EURUSD Elliott wave analysis and important price levels
From the Elliott wave perspective, EURUSD could have bottomed at 1.11 after a bearish impulse wave ended with an ending diagonal pattern. In the last update, we looked at this pattern and expected price dip below 1.111.
A dip toward 1.1075 was expected but the 5th wave was short of that and got truncated at 1.11 to complete a double bottom chart reversal pattern and then broke above the falling wave (v) channel as the chart below shows.
A 3-wave dip could happen to 1.1160-1.1150 could very much happen as we count a bullish impulse wave toward 1.15. Swing traders could wait for the wave (ii) dip and then a break above wave (i) for a possible trade opportunity. Unless another fast dip happens below 1.11, the current rally does not look to be over for now.