EURUSD bears remain in control below 1.2350

Written by Finacademy.io

February 8, 2021

Technical Analysis:

EURUSD might have carved a meaningful top at 1.2350 mark on January 06, 2021. Since then bears have remained in control and managed to push prices through 1.1953 last week. Immediate resistance is in place at 1.2350 handle, while intermediary support could be seen below 1.1950 levels respectively.

EURUSD had been rallying since March 2020 lows at 1.0636 and completed an impulse wave through 1.2350 recently. The 4H hour chart displayed here shows the rally since Wave (4) termination on November 04, 2020. As labelled here Wave (5) clearly subdivided in 5 waves before terminating around 1.2350 mark.

Ideally, an impulse wave is followed by a similar degree corrective drop and EURUSD bears might be preparing to produce an A-B-C decline towards 1.1200 levels at least. The first wave is expected to terminate around 1.1600 levels, the previous Wave (4) termination.

Looking at the wave structure since 1.2350 highs, bears might have managed to terminate lower degree Waves 1 around 1.2055 and subsequently Wave 2 just below 1.2200 handle. If the above holds well, prices would stay below 1.2190 and continue lower towards 1.1800 and beyond.

Alternately, EURUSD might produce an expanded flat corrective Wave 2 to terminate around 1.2200/30 handle going forward. Also note that 1.2200/30 zone is very close to fibonacci 0.618 retracement of the recent drop from 1.2350 and hence probability for a bearish turn remains high.

Either way, EURUSD remains bearish from 1.2100/1.2200 handle with a risk at 1.2350 mark. Intraday rallies remain possible towards 1.2100 and further. Watch out for a bearish reaction from close to 1.2100/1.2200 zone for continued decline.

Prepared by

Finacademy Technical Team

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