yesterday’s EUR/USD daily candle ended very bearish after breaking below the 21 ema low – as expected in our EUR/USD video. Bearish is now firmly in a bearish price swing.
This article will review how far the bearish price swing can last based on the key Elliott Wave and Fibonacci patterns.
Price Charts and Technical Analysis
The EUR/USD has made the final bearish turn as expected. The bullish wave B (pink) is therefore complete and a bearish price swing is now developing:
- The bearish price swing is expected to be a wave C (pink) of a larger ABC (pink) in wave 4 (purple).
- The wave 4 (purple) remains valid as long as price action stays above 1.17 and at the very least 1.15.
- A break below the 1.15 support indicates that wave 4 (purple) is not likely anymore. In that case, price is not building an ABC (pink) but a bearish 123 pattern.
- All of the Fibonacci support levels could be support but the main reversal levels are the 88.6% Fib and the previous bottom (blue box).
On the 4 hour chart, price action has broken the bottom (dotted green) of the downtrend channel:
- The bearish breakout below the support trend line (dotted green) and the 21 ema low helped confirm the bearish price swing.
- The strong bearish impulse is typical for a wave 3 (blue). The break below the -61.8% Fibonacci target helps confirm the wave 3 pattern rather than a wave C.
- The wave 3 (blue) is probably part of a larger wave 3 (orange) and wave 3 (grey).
- The main targets are the -1.618% FIb at 1.1915, the -2% Fib at 1.1865 and -2.618% Fib at 1.1782.
- Eventually a pullback to a shallow Fib should take place as part of a wave 4 retracement.
The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter.