EUR/USD Elliott Wave: Correction not over
Executive summary
- Wave 2 corrective decline has begun.
- The decline likely holds below 1.1830.
- Decline to 1.1030 – 1.1170 and possibly lower levels are anticipated.
Current Elliott Wave analysis
It appears EUR/USD is still embedded within a corrective dip from the July 1 high of 1.1830.
This means the current decline is Elliott wave 2 of a larger bullish impulse.
Our Q3 forecast presented on June 30 forecasted a top of wave 1 and decline in wave 2 to carry to 1.11-1.12. We followed up with another forecast on July 16 confirming a top and decline to 1.1170 and possibly lower levels.
The decline, so far, has developed in 3 waves. The August 1 low could be wave ((w)) of 2 or possibly ALL of wave 2. The rebound since August 1 is viewed as wave ((x)) that may find a top below 1.1704. Then, wave ((y)) would begin to lower levels.
I suspect after a brief rally, the decline will continue to dig deeper towards 1.1170.
There is a lot of price support between 1.1030-1.1170. Therefore, anticipate a more meaningful bottom and possibly the end of wave 2 developing in this price zone.
The 6-month rally in EUR/USD appears to have ended this month and a correction is likely underway to 1.1170 and possibly lower levels.
Bottom line
The Elliott wave corrective wave 2 is mid-way through development as a double zigzag. This downward correction may visit 1.1030 – 1.1170 in the coming weeks.
If EUR/USD breaks out to new highs, then we’ll reconsider the wave count for a more bullish structure.
Author
Zorrays Junaid
Alchemy Markets
Zorrays Junaid has extensive combined experience in the financial markets as a portfolio manager and trading coach. More recently, he is an Analyst with Alchemy Markets, and has contributed to DailyFX and Elliott Wave Forecast in the past.
