To answer this question, the article analyses the Elliott Wave and Fibonacci patterns.
Price Charts and Technical Analysis
The EUR/USD bearish breakout and strong impulse is typical for a wave 3 (orange) pattern:
- The current pullback is probably a wave 4 (orange). It is expected to be a typical wave 4, which is shallow, choppy, and lengthy.
- Price action has already made a pullback to the 23.6% Fibonacci level.
- But usually price retraces back (green arrows) to the 38.2% Fibonacci level.
- A bearish bounce (orange arrows) at the shallow Fib levels confirms a wave 4-5 (orange) pattern.
- After that, a re-break below the 21 ema zone could confirm the downtrend continuation.
- A break above the 50% Fib places this Elliott Wave outlook on hold whereas a very deep retracement invalidates it (red circle).
On the 1 hour chart, price action made a decline below the Wizz 7 target, which indicates how impulsive the bearish swing really was:
- A bullish ABC (green) pattern is expected in wave 4 (orange).
- A bearish bounce (red arrows) is expected at the 38.2% Fibonacci.
- A break below the support line (green) could indicate an immediate breakout (dotted red arrow).
- Sideways price action (orange/green arrows) could indicate a range followed by a bearish breakout.
- The main targets are located at 1.1750-1.18.
The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter
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