EURUSD Elliott wave analysis: is price close to a bullish reversal?

EURUSD bearish run has continued below 1.1250, close to testing 1.1175 support. The following give insights based on Elliott wave theory.

March 29, 2019. | AtoZ Markets – EURUSD is dropping lower to continue the bearish trend that has now lasted for more than a year. The currency pair is close to 1.1175 low that was formed early this month. Price is currently not looking at making a recovery yet despite the upbeat February German retail sales report. There are important fundamental and political indicators to look out with today’s Brexit the closest. The UK Parliament will vote whether to approve the deal triggering Article 50 with the EU. The US-China trade talk has also progressed well. The reports coming out suggest a deal will be reached between the two, to end the trade war.

EURUSD Elliott wave analysis and important price levels

EURUSD continues to be rooted to the downside but unless a fast break below 1.16 happens, the pair might start a bullish correction. The bearish impulse wave trend started in January/February 2018 is probably close to completion. The 5th wave of this impulse wave development is making an ending diagonal pattern. The ending diagonal pattern could signal a bounce above 1.15 to 1.18 and 1.21. The basic tenet of Elliott wave theory expects a 3-wave correction after a 5-wave trend. In the last update, we looked at how the 5th wave diagonal could end. The diagonal has one leg to complete downside. The current run could, therefore, hit below 1.1175 support. The chart below shows the two scenarios we considered.

Price broke below the intraday support level to support the first scenario (all waves and sub-waves in green) – a double zigzag pattern. Price is currently at 1.1215. A further dip below 1.1175 is now high on the cards. The chart below shows a slight change to the first scenario.

The dip from 1.145 looks corrective. The sub-waves since the price dropped into the falling channel is not very clear. A triple zigzag is suspected. The current dip will most likely continue to 1.116 within the channel. If a big break above the channel happens afterwards, the price might just start a move upside above 1.145. The long term bullish targets are 1.18 and 1.21.

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