EUR/USD has reached our initial target identified in September as the corrective pattern appears to be finished.
Elliott Wave at high probability for a reversal
We have been closely tracking the Elliott Wave pattern in DXY and EURUSD for the past months. After anticipating a turn and closing out shorts on August 20, we are waiting for the bullish corrective pattern to clear prior to wading back into the waters.
As late as September, the pattern began to clear and it appears as though the ‘b’ wave of an a-b-c Elliott wave zigzag pattern has finished. This means, we are anticipating EURUSD to trade higher towards 1.19-1.22 in the coming weeks.
EURUSD trade idea
Entry: Bullish break above 1.1550 or on a dip to 1.1470
First Target: 1.1850
Second Target: 1.2125
As evidenced through the RSI divergence, it appears EURUSD is trying to form a bottom. A bullish break above 1.1550 would be enough evidence that a bottom is in. A retracement to 1.1470 would afford a tight enough risk scenario to dip our toe in the water for a bullish trade as well.
Based on Elliott wave relationships, the first target is where wave (c) of the zigzag is equal in length to wave (a).
broad based us dollar weakness
We discussed in Monday’s US Opening Bell webinar the prospects for broad based US Dollar weakness. My colleague Tyler Yell highlighted a bullish GBPUSD opportunity that appears to have legs to it. We discuss in Monday’s webinar using 1.3133 as an early indication of a bullish breakout so long as GBPUSD remains above 1.2922.
The run towards USD weakness may carry DXY down to 93.80 and possibly 92.
Elliott Wave Theory FAQ
What Elliott Wave is EURUSD in right now?
Our analysis points to a bearish impulse wave ending from February 2018 to August 15, 2018. This bearish impulse wave is likely wave 1 of a larger bearish impulse wave or wave A of a larger zigzag wave. Therefore, we are correcting higher in a zigzag pattern and we appear to be starting wave 'c' of the zigzag.
Our beginner and advanced Elliott Wave guides share with you typical waveforms and structure that include tips on how to trade with the waves.
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---Written by Jeremy Wagner, CEWA-M
Jeremy Wagner is a Certified Elliott Wave Analyst with a Master’s designation. Jeremy provides Elliott Wave analysis on key markets as well as Elliott Wave educational resources. Read more of Jeremy’s Elliott Wave reports via his bio page.
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