the EUR/USD is in a downtrend channel and is now facing a critical 78.6% Fibonacci retracement support level. Who will win: the downtrend or support?
The EUR/USD is expected to make a bullish reversal according to the wave patterns and wave analysis. The current move down could be a retracement within the wave B (blue) of a larger bullish ABC (blue) zigzag. This becomes invalid if price is able to break below the 100% Fib level, which could spark a downtrend continuation.
The EUR/USD seems to have completed 5 bearish waves at the recent low. But the reversal only becomes more likely if price is able to break above the resistance trend line (red) of the downtrend channel. If price manages to make a breakout then it will be aiming for the Fibonacci targets of wave C vs A. Any break below the bottom could see price move towards 1.10 and then 1.09.
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Good trading, Chris Svorcik