The 4-hour chart analysis identifies EURUSD as being in a corrective counter-trend phase within a broader market trend. The technical pattern highlights gray wave two forming inside a larger bearish structure, namely orange wave five. This suggests that gray wave one has finalized its downward movement, followed by a temporary retracement phase in wave two. Such setups usually reflect a brief interruption in the trend, potentially followed by further bearish momentum.

Gray wave one is now complete, initiating a corrective bounce in gray wave two. This phase signals limited upward potential, as the structure continues to favor a bearish continuation into gray wave three, unless major resistance levels are breached. This technical outlook helps forex traders understand EURUSD’s placement in a larger corrective wave sequence.

As this corrective phase progresses, additional market volatility is likely. Wave two acts as a temporary stall in the overall downward trend. Traders should closely monitor for signs that wave two has ended, which would suggest the start of wave three's descent. This analysis provides insight into the short-term opportunity while highlighting the probable bearish continuation.

Traders are advised to watch for developing patterns that may offer better clarity on direction, while also practicing cautious position management due to the ambiguous wave interpretation. The present rise is seen as part of a corrective setup, not a new bullish trend, and the potential remains for renewed downward pressure after this correction phase completes.

EUR/USD Elliott Wave technical analysis

Function: Counter Trend.

Mode: Corrective.

Structure: Gray wave 2.

Position: Orange wave 5.

Direction next higher degrees: Gray wave 3.

Details: Gray wave 1 appears complete; gray wave 2 is currently developing.

The 4-hour chart analysis shows EURUSD in a counter-trend corrective movement within its broader bearish structure. The current setup indicates gray wave two is forming as part of a larger orange wave five decline. This implies gray wave one has concluded, and EURUSD has now entered a short-term retracement. Typically, this pattern reflects a pause in trend direction before resuming bearish momentum.

According to the wave count, gray wave one has ended and gray wave two has initiated a corrective rally. This phase is likely to offer limited upward potential, with the overall pattern favoring a downtrend continuation into gray wave three. Unless critical resistance zones are surpassed, the prevailing structure signals further weakness ahead. This analysis provides essential perspective on EURUSD's place within the corrective wave cycle.

The wave structure suggests more volatility could emerge as gray wave two unfolds. This wave acts as a temporary break within the larger decline. Traders should watch for signals of wave two's completion, which would likely trigger the start of gray wave three’s downward movement. This context helps identify both the current counter-trend window and the expected bearish follow-through.

Forex traders should stay alert to technical patterns that may better forecast market direction while adhering to risk-managed position sizing due to the uncertain nature of wave structures. The current rise appears to be part of a broader correction—not a trend reversal—suggesting further downside pressure could resume once this corrective move finalizes.

EUR/USD Elliott Wave technical analysis [Video]

Author

Peter Mathers

TradingLounge

Peter Mathers started actively trading in 1982. He began his career at Hoei and Shoin, a Japanese futures trading company.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.