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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 chart with elliott wave labels forecasting bullish trend.

EURUSD trade idea

Entry: Bullish break above 1.1550 or on a dip to 1.1470

Risk: 1.1430

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.

Why do traders lose money?

Regardless of the style of analysis, many traders do lose money because they do not take the time to study the market and the effect of leverage. At DailyFX, we have studied millions of live trades and boiled our study down into a Traits of Successful Traders guide. You will find how leverage and human nature affects our trading so you can implement tactics like ones described in the trading idea above.

New to FX trading? We created this guide just for you.

---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.

Communicate with Jeremy and have your shout below by posting in the comments area. Feel free to include your Elliott Wave count as well.

Discuss this market with Jeremy in Monday’s US Opening Bell webinar.

Follow on twitter @JWagnerFXTrader .