the EUR/USD is building a correction with lower highs and higher lows. Price action seems to be in a bearish ABC pattern within a bullish wave B. What are the key levels to consider?
The EUR/USD support (blue line) and resistance (red line) levels are key for determining the next price swing. A bullish breakout above the resistance indicates a completed bearish ABC (red) within wave B (purple) and a continuation higher within the wave C (purple). The targets are the Fibonacci levels although the main Fib target is confluence of the -61.8% Fib and 78.6% Fib at 1.1925. A bearish breakout indicates a downside move towards the Fibonacci retracement levels of wave B (purple). This remains valid as long as price remains above the 100% Fibonacci level.
The EUR/USD 1 hour chart is showing the current indecisiveness well. A bullish breakout above the resistance (red box) confirms a completed ABC (red). But a bearish breakout below the support (blue box) indicates that the waves B and C will shift forward (red arrows). The bulls are expected to keep control, either after the breakout or after a bounce at the Fibonacci retracement levels.