EURUSD might be progressing into lower degree wave ii within Wave 3 of (3) since 1.2266 highs recently. It seems to be unfolding the third wave at 3 different degrees and if the structure unfolds accordingly, the drop should accelerate.
EURUSD had rallied through 1.2218 highs over the last week, before turning lower again. Looking at the wave structure since 1.2266 levels, bears might have carved Waves 1 and 2 around 1.2132 and 1.2154 levels respectively.
Furthermore, lone lesser degree waves I and ii also seem to be in place around 1.2103 and 1.2218 levels respectively. If the above is correct, a iii of 3rd of (3) wave might have just resumed towards 1.1986 in the near term.
A break below 1.1986 will confirm that trend is reversed lower and bears might be inclined to push through 1.1700 and at least towards 1.1300 levels, going further. Immediate resistance is being faced around 1.2218 while support is around 1.2050, followed by 1.1986 levels respectively.
The larger degree wave structure could be seen as follows: The drop between 1.2350 and 1.1700 was subdivided into 5 waves unfolding into a leading diagonal Wave (1) on chart here. The subsequent rally has been corrective A-B-C towards 1.2266, marked as Wave (2) respectively.
Most traders might be inclined to remain short for now with risk around 1.2266 at least and potential reward towards 1.1986 and 1.1300 levels respectively.
Finacademy Technical Team
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