EUR/USD Bullish Wave C Within Bearish ABC Pattern

The EUR/USD is building a bearish pullback within the long-term uptrend. Price action is expected to build either an ABC or ABCDE triangle pattern (pink) on the daily chart.

This article reviews what price movement to expect during the pullback. We also analyse the key support and resistance zones.

Price Charts and Technical Analysis

(Click on image to enlarge)

The EUR/USD seems to have completed a wave 3 (purple) at the recent high. This means that the current pullback is likely a wave 4 (purple).

  • Waves 4 are usually shallow retracements. 
  • An ABC zigzag could take price down quite soon (orange arrows).
  • A sideways correction could be an ABCDE pattern (grey arrows).
  • Waves 4 respect the 38.2% Fibonacci retracement level most of the time. 
  • Other key levels are the 23.6% and 50% Fibonacci levels.
  • These Fib levels are expected to act as support (blue boxes). 
  • They could also create a larger bounce for an uptrend continuation (blue arrows).

Only a break below the 50% Fib would put the uptrend on hold (yellow circle). An even deeper retrace would invalidate it (red circle).

On the 4 hour chart, the bearish price action respected the previous bottom and made a bullish bounce. This seems to confirm a bullish ABC (orange) in wave B (grey). 

A break above the 21 ema zone could confirm a 5 wave (orange) pattern up in wave C (grey) to complete wave B (pink).

A bearish bounce at or below the 61.8% Fibonacci level makes a bearish ABC zigzag more likely. A deeper retracement towards the 78.6% Fib or higher makes an ABC flat or ABCDE triangle more likely (light green letters).

(Click on image to enlarge)

 

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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