EURUSD is trading into the buy zone of resistance trend line since breaking higher over the last week. The currency trades near 1.2120/25 levels for now and is expected to push through 1.2190 before facing resistance again.
Also, note that Fibonacci 0.618 retracement of the entire drop between 1.2350 and 1.1950 is seen passing through 1.2200 marks. If bulls manage to push through 1.2200 regions, a high probability remains for a bearish reaction as bears remain poised to take control back.
The short-term wave structure reveals an impulse drop Wave 1 from 1.2350 through 1.2050 levels respectively. Since then, a complex corrective Wave 2 might be underway towards 1.2200 marks as highlighted on the 4H chart here.
If the above structure unfolds accordingly, EURUSD might carve/terminate potential Wave 2 around 1.2200/50 levels and then resume lower, as Wave 3 begins to unfold. A Fibonacci extension of the entire drop between 1.2350 and 1.1950 is pointing towards 1.1600.
EURUSD bears might remain inclined to push through 1.1600 in the next several weeks. If the above unfolds accordingly, the currency might confirm a much deeper correction going forward. Bottom line remains prices should stay below 1.2350 marks.
We might experience a bit more sideways action for 1-2 days before EURUSD could push through 1.2200 zones. The next wave is expected to be sharp decline towards 1.1600 marks as Wave 3 of a similar degree begins to unfold.
Finacademy Technical Team
Gold dropped to $1770 mark on Tuesday before finding some support. The yellow metal is still testing its intermediate trend line support connecting $1721 and $1758 levels respectively.
The US dollar index carves a meaningful top around 96.88 mark over the last week. The index reversed sharply on Friday confirming a bearish Evening Star candlestick pattern on the daily chart.
EURUSD has carved a potential bottom at 1.1186 mark over the last week. EURO bulls have managed to stage a 150 pip rally thereafter, before pulling back.