EURUSD finally breaks below 1.2150/60 initial support

Written by

May 31, 2021

Technical Analysis:

EURUSD had dropped below 1.2150 support on Friday confirming a potential trend reversal ahead. It seems more probable for a meaningful top in place around 1.2266 levels as bears managed to take out lower degree wave iv if the ending diagonal at 1.2150 levels.

EURUSD has pulled back since then and is expected to reach up to 1.2230/40 levels before finding resistance again. If prices managed to reach there, bears might turn lower again towards 1.1986 and further as potential lower degree wave iii unfolds.

EURUSD has dropped between 1.2266 and 1.2130 levels sub dividing into 5 waves. The subsequent rally is expected to be corrective, which could reach 1.2240 levels. The structure can be defined as lower degree wave I and ii respectively.

If the above is correct, EURUSD should resume its decline towards 1.1986 and 1.1700 levels as wave iii begins to unfold. The entire structure would complete around 1.1300 levels at least. It remains to be seen if EURO finds support there.

The larger degree wave structure since 1.2350 reveals a potential leading diagonal between 1.2350 and 1.1704 levels respectively. The subsequent rally was corrective s-b-c, terminating around 1.2266 levels respectively.

If the above structure holds well, EURUSD shall remain below 1.2350 and continue lower from here as larger degree Wave (3) infolds.

Prepared by

Finacademy Technical Team

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