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.
Looking at the wave structure, the earlier drop between 1.2350 and 1.1700 had unfolded into 5 waves, producing a leading diagonal Wave (1) on the chart here. Leading diagonals normally appear at the beginning of a new trend or as Wave A of the corrective A-B-C pattern.
Further, the subsequent rally from 1.1700 through 1.2266 was a corrective wave A-B-C; labelled as Wave (2) on the chart here. A potential Wave (3) lower seems to be progressing towards 1.1700 levels at least, if not further.
The fibonacci extensions are pointing towards 1.1300 levels at least and potential remains for a drop toward 1.0636 as well. We shall re-look at the price action around 1.1300 mark to see if bears still remain to drag lower or not.
Any intraday or interday rally from current price action should be taken as an opportunity to initiate fresh short positions. Most traders remain inclined to hold and add further short positions, going further.
Finacademy Technical Team
Gold prices dropped through $1773 lows on Thursday before finding support again. The drop from $1793 was in-line with price action of a gartley.
The US dollar index might have carved a lower high around 96.50 mark on Tuesday. The index dropped through 95.80 levels on Wednesday before finding some support.
USDJPY is soon approaching a formidable resistance zone around the 114.40-50 mark. The currency pair has been carving a corrective rally since 112.50 lows.