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EURUSD: Review of Technical / Elliott Wave Pattern

Monthly time frame:

Observable facts:

  • From the March 1985 the EURUSD has been moving within the boundaries of a channel
  • The decline from the July 2008 is corrective but there is no technical indication that it is over
  • The next support is located at the trend line from the March 1985 low more or less at 1.0000
  • There is a potential Head and Shoulder with a measured target at 0.7900
  • The resistance is located at the neckline of the assumed H&S = 1.2200 ish

EURUSD Monthly Chart
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  • In addition to the Head and Shoulder we could make the case that the current decline is a thrust wave (C) following a Triangle. If this pattern is correct the measured target for the assumed wave (C) is located at 0.9000 ish.

EURUSD Monthly  Triangle Chart
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  • Odds favour more down side price action
  • The issue is if the current shallow rebound is over
  • It is common in countertrend rebounds to retrace at least the 0.382 of the previous down leg but with 5 trading days left to end the month so far we have a Shooting Star which if confirmed bears could regain the upper hand

EURUSD Monthly Chart 2
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Weekly time frame:

  • From the March low we have a 3 wave up leg (Corrective rebound)
  • Price last week has stalled at the trend line resistance of the decline from the May high
  • We have a bearish weekly Marubozu with an eod print below the horizontal support at 1.1040
  • A Marubozu is considered an extremely weak candlestick that often belongs to a bearish continuation pattern
  • Therefore if the support, now resistance at 1.1040 is not reclaimed (End of week print) the risk of a retest of the March low would be increasing

EURUSD Weekly Chart
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Daily time frame:

  • From the March low price has unfolded a Zig Zag (ABC). The wave (C) has been established with a Rising Wedge, which in part is the reason of the sharp decline
  • Although the technical "tone" has deteriorated (It is now trading below the 10 and 20 dma and it is now testing the 50 dma) we should not completely rule out the scenario of a larger rebound as long as the 0.618 retracement of the assumed wave (C), which is located at 1,0880, holds

EURUSD Daily Chart
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  • Daily oscillators are poised for a bearish resolution as long as the MACD bearish signal cross is cancelled and the RSI reclaims the 50 line.

EURUSD Daily Momentum Chart
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60 minute time frame:

  • Even though the first down leg from the May 15 high is a doubtful impulsive down leg it is probable that the current one (Either a wave C or 3) should unfold a 5-wave decline in order to unfold at least a Zig Zag down. The equality extension target for the second leg down would be located at 1.0800
  • Maybe with a small wedge price is on the verge of completing the wave (i) of a larger impulsive decline
  • Therefore the following rebound (If corrective) will most likely be sold

EURUSD 60-Minute Chart
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