Looking at the daily chart, we notice a few different things from a technical and Elliott Wave perspective that are giving us signals we may be closing in on at least a temporary bottom. The first is that we have what we can consider a completed (or very close to completed) abc corrective pattern into the current levels. While on the smaller degree timeframes this corrective pattern would look slightly better with one more low, we do technically have enough waves in place at the current levels to consider this move off of the January highs as a fully completed ABC.
Also, from a Fibonacci perspective we have already hit key target levels on the smaller degree timeframes and are approaching a very key larger degree Fibonacci support level at the 1.3013 level.
From a purely technical perspective we notice that the MACD on the daily chart is showing bottoming signs as well with the moving averages attempting to cross back over. The MACD on the 4-hour chart has also been showing signs of positive divergence for the majority of this move down off of the 1.4015 high, giving us another signal that we may be forming at least a local bottom.
Zooming into the smaller degree time-frames I am counting the move off of the 1.3445 high as an Ending Diagonal. With this being the case, I would expect the reversal out of this Ending Diagonal to be quite swift and return sharply to the point of origin at the 1.3445 level. The fact that we have yet to see this sharp move off of this bottom is one of the reasons why at this point I am leaning towards seeing at least one more low prior to considering a local bottom being in place just yet. With that being said, a move back over the 1.3396 level would be the first signal that we have made at least a local bottom in this pair with further confirmation coming with a break over the 1.3445 level.
Once this bottom is confirmed I will first look towards the structure of the move up off of the low to help give us clues as to whether this low is simply a local bottom with further downside action to come or if we are indeed on our way back over the January highs. From a purely price perspective a move back over the 1.3681 level would be the first signal that this bottom is something more than a local bottom and that we will see higher levels over the course of the next several months.
The commentaries and analysis represent the opinions of the analyst nd should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret these opinions as constituting investment advice. Our analysts may have personal positions in the instruments mentioned.
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