EURUSD - Sideways Movement with an Upwards Bias Ahead

As expected the euro continued moving towards the downside, reached our first target at 1.2869, and came within 26 pips of reaching our second target at 1.2801.

There are many signs that the current downtrend, which had lasted for nearly two months, may be coming to a temporary end. In fact, we expect that the coming 3 weeks or so will witness a period of sideways movement with an upwards bias.

We’re updating our count to reflect the most recent price action and to present tighter targets and invalidation points.

6-Hour Main Count

– Invalidation Point: 1.3504
– Confirmation Point: 1.2931 – 1.2996
– Upwards Target : 1.3040 – 1.3166
– Wave number: Minor 4
– Wave structure: Corrective
– Wave pattern: Zigzag, Flat, Triangle, or Combination

Main 6-Hour Wave Count

The bigger picture sees the euro moving downwards in intermediate wave (A), which is forming an impulse labeled minor waves 1 through 5.

Minor wave 3 formed an impulse labeled minute wave i though v, and has reached over 161.8% the length of minor wave 1.

Within it, minute wave v formed an impulse labeled minuette waves (i) through (v), and has reached 161.8% the length of minute waves i and iii.

Within it, minuette wave (iii) formed an impulse labeled subminuette waves i through v, and reached 261.8% the length of minuette wave (i).

Minuette waves (v) formed impulse labeled subminuette waves i through v, and has reached almost 161.8% the length of minuette wave (iii).

Within it, subminuette wave i formed an impulse labeled micro waves 1 through 5.

Subminuette wave iii also formed an impulse labeled micro waves 1 through 5, reaching 261.8% the length of subminuette wave i.

Subminuette wave iv unfolded as a double zigzag labeled micro waves W, X and Y, retracing nearly 50% of subminuette wave iii.

Subminuette wave v unfolded as an impulse labeled micro waves 1 through 5, and has reached almost 161.8% the length of subminuette wave i.

This count expects that minor wave 3 is now complete or very near completion, and that the euro will soon start moving towards the upside in minor wave 4. This will be initially confirmed by movement above 1.2931, with higher confidence above 1.2996.

The MACD indicator supports this count by showing a clear bullish divergence, which is the typical momentum indication of a trend-reversal or interruption.

In terms of candlestick analysis, no clear pattern appears at this point.

At 1.3040 minor wave 4 would retrace 23.6% of minor wave 3, then at 1.3166 it would retrace 38.2% of its length.

This wave count is invalidated by movement above 1.3504 as minor wave 4 within this impulse may not enter the price territory of minor wave 1.