EURUSD continued the bullish move today, now close to 1.175. It seems the bullish correction will soon complete the first phase which should be followed by a corrective dip toward 1.15. How likely is this?
In yesterday’s EURUSD Elliott wave analysis, we looked at the rally from 1.13. The rally was supposed to be wave A of the bullish correction of the year-long bearish impulse wave. In yesterday’s update, the chart below was used.
Wave A is emerging into an impulse wave. Price is in the process of completing the 5th sub-wave of A. Wave (v) of A will be expected to be an impulse wave or an ending diagonal. Once this completes, price would be expected to break below the rising channel and drop back to 1.15-1.16 before the bullish journey completes.
The impulsive wave A which was expected to be a motive wave (impulse wave or an ending diagonal), was developing into an impulse wave. The 5th sub-wave of the rally was not yet concluded. How has price played out since then?Do we have something clear to use?
The chart above shows the last leg could complete with an ending diagonal. Ending diagonals are often seen at the 5th wave of an impulse wave or the last leg of a correction. It’s a terminating or reversal price pattern. Price often follows the end of this pattern with a fast move in the opposite direction of the immediate trend (bearish in this case). A break below 1.166 or the bullish channel (in blue) would be a good bearish signal, leading to a bearish corrective B-wave which would be expected to extend below 1.15 price level. If the necessary breakout doesn’t happen, we might see a slight decline before further rallies to 1.175 or above.
What are your view? Please share in the comment box below.