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EUR/USD has slowly been working itself lower. The technical pattern has become unclear so we look for clues that may tip us off to the next move.

On an intraday basis, we can identify an impulse wave lower. Impulse waves can make up larger impulse waves or they can be embedded in the sub-structure of a corrective wave. Regardless of the larger pattern EUR/USD is building, we can count the five wave impulse as completed. The Relative Strength Index divergence on the 4 hour chart is consistent with a fifth wave. Therefore, the higher probability move is a bounce back to 1.17.

Struggling to trade EUR/USD? This could be why.

EUR/USD Elliott Wave 4 Hour Chart

Short Term EUR/USD Pattern Hints at Bounce to 1.17

At 1.17, the Elliott Wave models diverge with some showing the move as being the start to a new trend higher that retests 1.20. Other Elliott Wave models suggest the move to 1.17 is just a partial retracement of the previous down trend.

We will keep an eye on the structure of the advance, if it occurs, to see if it forms in five waves (bullish) or three waves (bearish).

The sentiment picture continues to support bullish patterns. The current sentiment reading is -1.8 with the net short traders growing. This mixes as a bullish sentiment signal. View the live sentiment reading to keep on top of any changes that may occur.

Bottom line, the higher probability EUR/USD move is a bounce higher towards 1.17. Depending on the structure higher will then begin to eliminate the continued bullish pattern or if the bearish resolution prevails.

Are you new to trading the FX market? This guide was created just for you.

This is a shorter term forecast for EUR and USD. For a longer term quarterly view, grab these quarterly forecasts.

---Written by Jeremy Wagner, CEWA-M

For further study on Elliott Wave impulse patterns, watch this webinar recording.

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

Other Elliott Wave forecasts by Jeremy:

Gold price forecast points towards lower levels.

NZDUSD Elliott Wave Analysis: Temporary Relief Rallies

USD/JPY stalls but holds above support.

Price action analysis for AUDUSD, NZDUSD, EURUSD [Webinar recording]

Follow on twitter @JWagnerFXTrader .

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