the EUR/USD made a bearish bounce as expected after breaking above the 21 ema zone. This is a key decision for either one more bearish swing or a bullish bounce.
This article reviews the Elliott Wave patterns and the expected price path of least resistance.
The EUR/USD is now moving lower as part of a wave 2 or B (purple). A bearish breakout indicates a deeper price swing where a bullish bounce confirms the end of this swing.
Eventually a bullish swing is expected to take place (green arrows). This will create either a wave 3 or C. Traders can see whether it’s a wave 3 or C depending on the pattern.
On the 1 hour chart, we see the price action completed a 5 wave pattern (orange). It was followed by an ABC down and an ABC up.
Now the main levels to watch are the trend lines and 21 ema high and low.
The bullish outlook is invalidated if price action breaks below the bottom (red circle).