Euro faces bearish reversal: Elliott Wave

Last week we saw some nice moves in the direction of a stronger U.S. dollar, which could stay in play for this week as well, but before USD goes higher or EUR and CHF falls deeper, we need a corrective retracement on the intraday basis.

EUR/USD has been trading nicely to the downside since start of the year, away from that 1.3900 swing high where we think that EUR/USD formed a top. Notice that recent leg down from 1.3818 looks sharp that has extended through the channel support and through 1.3615 swing low as well, that should be an important sign for a changed trend. With that in mind, we think that EUR/USD will stay under pressure and that pair is now making five waves down in red wave 1). At the moment the pair is falling but probably in final stages of a sub-wave 3 that may form a low around current 161.8% Fibonacci extension level.

EUR/USD 4h

On a daily chart we can see an ending diagonal possibly completed after recent fall toward the lower side of the pattern. We still need a decisive break of that trend line connected from wave 2) low that will be a confirmation for a change in trend.

EUR/USD Daily

About the Author

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and TheLFB.com. He also is founder of forex services on www.ew-forecast.com. EW-Forecast.com provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website: http://www.ew-forecast.com/

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