The euro turned bearish against the U.S. dollar (FOREX:EURUSD) at the start of January from a 1.3900 spike high, which we assume represents the final part of a bullish trend. From there, the market fell sharply lower almost 400 pips, so the pair has completed an ending diagonal. However, a key for a breakdown would be move through the red wave 4) swing low that is placed around the 1.3300 figure, still far away from current levels.
EUR/USD Daily Elliott Wave Analysis
As expected, the EUR/USD has turned down from above 1.3700 area where we labeled the end of an expanded flat formation that now shows signs of completion after a sharp fall down to 1.3530. The current decline is showing signs of an impulsive pattern, so we suspect that the EUR/USD is heading south. Trend is down as long as 1.3683 remains in place.
EUR/USD four-hour Elliott Wave Analysis
Elliott Wave Education: Flat Pattern
A Flat is a three-wave pattern labeled A-B-C that generally moves sideways. It is corrective, counter-trend and is a very common Elliott Wave pattern.
- Structure is 3-3-5
- Wave B moves beyond the start of wave A
- Wave C ends more substantially beyond the ending level of wave A
- Appears in wave two or four in an impulse, wave B in an A-B-C, wave X in a double or triple zig-zag, or wave Y in a triple threes