EURUSD has stayed above the 1.11 handle for a week. Will it advance higher to 1.125? The following EURUSD Elliott wave analysis looks at what could happen next.
December 19, 2019 | AtoZ Markets – The Euro-dollar currency pair is hanging between 1.11 and 1.12. Last week UK election shot the currency pair to 1.1199 and thus hitting its highest price in 3 months, However, a quick dip followed below the 1.118 resistance level. The bearish momentum was limited above the 1.11 as many attempts to break below it failed. This week, the price started around 1.1125 and is currently back at this level after testing the 1.118 resistance level. It seems the price will remain in the 1.11-1.12 range throughout the week before breaking out. Meanwhile, the US-China trade deal, Brexit headlines and the current internal politics in the US will be the major market sentiments determiners as the year closes.
Trump’s impeachment, what is the impact?
The US President Trump has been impeached by the country’s House of Representatives amid charges of irregularities. This was largely expected as the opposition party dominates the House. The President will now await trials from the Senate with a Republican majority. Meanwhile, the White House has expressed optimism that the President would win eventually. However, the market has barely reacted. The broader bullish trend might, therefore, continue toward 1.125 before Christmas. However, the long-term bearish trend is still intact. We will see how the market responds to the impeachment drama in the US.
EURUSD Elliott wave analysis
From the Elliott wave perspective, the long-term trend remains bearish. However, the trend is overstretched and perhaps oversold. Having said that, we can’t be certain the end of the trend since a sharp wave pattern did not complete the 5th wave of the bearish impulse wave from February 2019. The current bounce from 1.088 is looking corrective. If the price proves so in the coming weeks, we might see the continuation of the bearish trend to 1.075. In the last update, we used the chart below (Charting tools from TradingView)
Further rally to 1.125-1.3 is very much likely to complete a simple zigzag pattern from 1.088. Meanwhile, in the short term, the price is currently completing what looks like a triangle structure as the new chart below shows.
The emerging triangle is sitting above the 1.11 critical level. If it provides support, we should see the EURUSD price break upside to the 1.125-1.128 bullish target zone. However, there is a strong resistance zone at 1.118-1.12 that the market needs to overcome.