EURUSD Might Recover, But How High?

On September 20th, we published “EURUSD Next Stop: Parity”, saying that “EURUSD might plunge to a new low, below 1.0460″. It has been more than a month, so let’s refresh your memory by taking a look at the old forecast first. It is given on the chart below.

So, there was a nice five-wave impulse to the south, followed by a three-wave recovery. According to the Elliott Wave Principle, another decline had to be expected. Having the bigger picture in mind, we thought parity is a good long term target. The following chart shows what happened next.

Yes, we know it is not there yet. After touching the 61.8% Fibonacci level for the second time, EURUSD headed straight down, just as expected. Yesterday, on October 28th, the pair fell to 1.0896. Right now, it seems like reaching parity is just a matter of time. As the above-shown chart demonstrates, we might see a temporary recovery up to 1.1100 soon, but eventually, the bears should prevail.

However, every trader’s job is to constantly look for alternative scenarios, where his idea would fail, even if everything is going just fine at the moment. The alternative count for EURUSD is visible below.

Here, we assume that the whole decline from 1.1713 to 1.0896 is just an (A)-(B)-(C) zig-zag correction. If so, the recovery we are expecting could turn out to be much bigger. For now, we would stick to the primary count and stay long-term bearish, since there is no indication it is going to fail yet. However, we will keep in mind the alternative outlook. In case 1.1100 is significantly broken in the weeks ahead, we might have to switch to it. It is up to the Market to decide.