the EUR/USD made a bearish retracement after a strong bull run. The pullback is probably a wave 4 (blue). More bullishness is expected BUT price action could build a sizable correction first.
The EUR/USD is expected to respect and bounce at the Fibonacci retracement levels of wave 4 vs 3. A break below the 61.8% Fib and support trend line (blue) invalidates (red x) the wave 4 pattern (blue). After price completes the correction in wave 4 (blue), price is expected to make a bullish run towards the Fibonacci targets at 1.16 and 1.17.
The EUR/USD is expecting an ABC (green) flat correction within wave 4 (blue). Within an ABC flat, price action should make an ABC within wave B (green) and 5 bearish waves (orange lines) within wave C of wave 4 (blue). The second most likely alternative is a triangle pattern. The least likely is a zigzag correction. The wave 4 (blue) is usually lengthy and could even expand into a complex correction. But keep in mind that the current market volatility remains high and price action could make impulsive movements at any moment.
The analysis has been done with SWAT method (simple wave analysis and trading).
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