EUR/USD Bearish Breakout Starts ABC Zigzag Pattern Towards 1.1875

The EUR/USD broke the support trend line (dotted green) after completing 5 strong bullish waves. The old uptrend has been replaced by a new downtrend.

This article analyses what to expect from the price and wave patterns. We also review key targets and decision zones.

Price Charts and Technical Analysis

The EUR/USD seems to have completed 5 waves (grey) of wave 5 waves (pink). This price swing is probably a wave A (purple) of a larger ABC (purple) zigzag correction. The ABC could fit within a wave B (red) of a larger ABC (red) pattern:

  • If price action is going to move lower in wave B (purple), then it will likely create an ABC (pink) pattern downwards.
  • Usually speaking, the wave A (pink) of a zigzag finishes at the 38.2% Fib and 144 ema close. 
  • A 3 wave bounce (green arrows) from the support could confirm a wave B (pink).
  • A bearish reaction (orange arrow) at the resistance zone could confirm a wave C (pink).
  • The main target of the wave C is the 61.8% Fibonacci level. This is where the wave B (purple) could end and the wave C (purple) could start (blue arrow).
  • A break below the bottom invalidates this wave outlook. A break above the top places it on hold and could indicate an uptrend or a different type of correction in wave B (purple) – for instance not a zigzag but an ABC flat.

On the 1 hour chart, price action has broken below the support trend lines (dotted green) and the 144 ema, which is indicating a shift from an uptrend to a downtrend:

  • The bearish bounce at the 50% Fibonacci level seems to complete a bullish ABC (orange) pattern in wave 4 (grey).
  • A lower low could confirm the wave 5 (grey) in wave A (pink) at the Wizz 5 and -27.2% Fib target.
  • A bullish bounce (green arrows) could indicate the wave B (pink).
  • A break above the resistance trend line (orange) and the 144 ema could indicate that the wave 4 and 5 (grey) of A (pink) has already been completed. Price could move up to the Fibonacci levels.
  • Only a deep push up invalidates this temporary bearish wave analysis.
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Disclaimer: The opinions in this article are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit ...

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