EURUSD had dropped to 1.1560-65 low over the past week before finding some support. The currency pair rallied through 1.1607 thereafter, taking out initial resistance on lower timeframe. Moreover, a bullish engulfing pattern is produced on the daily chart indicating potential reversal.
EURUSD has also dropped to the Elliott Channel support as seen on the chart presented. High probability remains for a bullish reversal at least towards 1.1900-10 mark, which is initial resistance. If the corrective drop is complete, EURO bulls would be inclined to push through 1.2350 mark.
EURUSD reversed from 1.2350 mark in January 2021, and has carved (A)-(B)-(C) corrective wave as labelled on the chart. If the above is correct, bulls would be back in control and push above 1.2350 in the next several weeks.
Alternatively, the corrective wave (A)-(B)-(C) might be unfolding Wave (C) towards 1.1300 mark. In this case EURUSD might have terminated Wave 1 of (C) around 1.1560-65 and should rally towards 1.1900-1.2000 handle to terminate Wave 2 of (C), before turning lower again.
Either way, a rally from current levels remain high probability. The fibonacci 0.50 retracement of potential Wave 1 is around 1.1900, which could be tested in the next few trading sessions. Traders might position themselves accordingly.
Finacademy Technical Team
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