EURUSD had extended its rally towards 1.2171 highs on Friday and has hit a shallow high around 1.2177 in early trade today. The rally from 1.1704 has exceeded fibonacci 0.618 retracement of earlier drop between 1.2350 and 1.1704 levels respectively.
EURUSD wave structure still remains constructive for bears to take control from here. The earlier drop between 1.2350 and 1.1704 unfolded into 5 waves labelled as Waves 1 through 5 on the above chart. A potential leading diagonal Wave (1) could be in place.
The subsequent rally since 1.1704 might have unfolded as a zigzag correction. The sub waves are labelled as a-b-c, terminating potential Wave (2). Please note that fibonacci 0.786 retracement is seen passing through 1.2217 levels and probability remains for a test before reversal lower.
Alternately, a sustained rally above 1.2230 mark would threaten to push above 1.2350 levels and also change the proposed bearish structure. At the moment, we shall keep the preferred count as lower against 1.2350 levels.
Immediate support is now seen at 1.1987 mark and a break below that is required to confirm a top in place. Prices have raised above the trend line resistance for now, and it would be interesting to see how the daily chart unfolds, going forward.
Most traders might still continue to hold short positions against 1.2350 highs. Watch out for an acceleration lower on a break below 1.1987 handle, going forward.
Finacademy Technical Team
EURUSD has finally reversed lower from 1.2218 highs last week, after having drifted sideways for a while. The drop was much anticipated as bears have managed to take out over 300 pips since last Wednesday. They remain poised to target below 1.1700 in the near term.
US Dollar Index has raised through 92.00 levels as of now and bulls are looking poised to extend further through 95.00, 96.00 levels in the next few weeks. It is quite possible that they continue higher from here itself or after a pullback, but prices stay above 89.60 levels.
USDJPY breaks higher towards 110.80 levels yesterday as the technical direction was clear and discussed here. At times market awaits a trigger to push through its determined trend; it was the Fed interest rate yesterday that provided the same.