the EUR/USD made a bearish breakout as expected in our Elliott Wave analysis on Tuesday. Price action fell below 1.2050 towards the round psychological support at 1.20. There it made a short bullish bounce before breaking earlier today below 1.20.
This article reviews the main targets for the decline. We also analyse what waves and price swings to expect this week.
The EUR/USD is building a bearish trend channel. But price action is also approaching the 23.6% Fibonacci retracement level of wave 4 (purple). What can be expected from the waves and Fibs?
A bullish bounce (blue arrow) is eventually expected at the 38.2% (or 50%) Fibonacci level if the wave 4 (purple) analysis is correct.
On the 4 hour chart, price action seems to be building 5 waves (grey) within wave C (pink). This seems to fit the ABC zigzag analysis after 5 waves (grey) were completed in wave A (pink).
The current push lower is probably a wave 3 (orange) that could complete at the 23.6% Fib of the daily chart. Then a shallow flag pattern should confirm wave 4 (orange) as long as the pullback remains below the 50% Fib and resistance trend line (orange).
A downtrend continuation is expected to fall towards 1.1915-25. Then even as far as 1.1750-1.18 target zone.