EURUSD technical analysis ahead of ECB minutes

EURUSD has returned to the 1.108-1.11 resistance zone. Ahead of today’s ECB minutes, the following looks at the EURUSD technical analysis from the Elliott wave perspective.

November 21, 2019 | AtoZ Markets – After a minor dip to 1.1053 earlier in the week, EURUSD has returned upside ahead of the ECB meeting. The rally started on Wednesday following a bearish USD and a dull FOMC report. Traders are extremely cautious especially concerning the US-China trade relation. The resurgence from 1.088 has now continued to the 1.108-1.11 resistance zone. It remains to be seen whether the price will break above this zone before, during or after the ECB meeting. On the other hand, if the ECB sound too dovish, the long term bearish trend will most likely resume below 1.088.

The geopolitical tensions have dominated the headlines in recent weeks. The Brexit and the US-China trade conflict have lasted for several months. If recent reports are anything to consider, a trade deal between US and China is very difficult to achieve. With the US meddling into Hong Kong politics and President Trump expressing doubts over China’s readiness to meet up with his expectations, investors are shrouded in doubts.

In its November meeting, the Fed decided to hold rates unchanged and perhaps for the rest of the year unless there is a need to act otherwise. Since mid-November, EURUSD has gained 0.9% (100 Pips) as a result of a weak USD and EU’s easing policy yielding some good results. The market will now focus on today’s ECB minutes. We will have to see what further measures the bank takes. Whether it will continue its stimulus measures or pause till the next meeting.

EURUSD technical analysis: Elliott wave perspective

Technically, EURUSD medium-term trend is bullish although the long-term bearish trend is not yet broken. The price is currently at a strong resistance zone (1.108-1.11). In the last update, we looked at the long-term bearish impulse wave from February 2018. The extended 5th wave started at 1.183 in September 2018 and has lasted for over a year. The 5th wave is also completing an ending diagonal pattern. The 4th wave of the diagonal 5th ended at 1.118 where we had a double top reversal pattern. The price thereafter dropped to 1.088 to start the 5th wave of the diagonal 5th. In the last update, we used the chart below to analyze the emergence of the 5th wave of the diagonal 5th (Charting tools from TradingView).

EURUSD technical analysis

The price broke below the trendline to 1.1053. However, the rally that followed is now close to challenging 1.109 as the new chart below shows.

EURUSD technical analysis

If EURUSD stays below 1.109 and breaks below 1.105, we should see more decline toward 1.088. On the other hand, a surge above 1.11 might lead to a test of the diagonal upper line below 1.1150. It is important to wait till after the ECB meeting and see how it affects the current EURUSD technical analysis.

Read Also: EURUSD Fundamental Analysis ahead of ECB minutes

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