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
EURUSD might have carved a potential bottom around 1.1690-1.1700 over the last week. The currency is trading above 1.1720 at the time of writing as bulls prepare to push higher towards 1.2050-1.2100 in the next few weeks.
SPX500 has rallied through 4460-80 zone yesterday, carving potential Wave 2 correction. The counter trend correction has also reached fibonacci 0.618 retracement of Wave 1 as highlighted on the 4H chart here. The indice might resume lower soon from current levels.
USDJPY might be unfolding a combination to terminate Wave (4) towards 10.50 over the next few weeks. A potential ending diagonal could be unfolding from 110.50 mark as bears remain poised to drag below 108.50 in the next sub-wave.