Weekly waves: EUR/USD, Bitcoin and Dow Jones Index

EUR/USD confirms bearish wave 3 pattern

The EUR/USD made a key bearish breakout below the support trend line (dotted green). Let’s review what the breakout indicates:

1. The EUR/USD is now in a wave 3 (pink) rather than a wave C because price action is approaching the -161.8% Fibonacci target.

2. The -161.8% Fibonacci target could be a bouncing spot. The strength of the bounce will depend if the wave 3 (pink) will complete at this target or the -200% Fib target.

3. A strong bullish bounce could indicate the end of wave 3 (pink) and the start of wave 4 (pink).

4. A mild bullish reaction indicates that the wave 3 (pink) is still developing and a bearish breakout should see price towards 1.05, 1.04, 1.025, and 1.00.

5. A bullish retracement should usually be shallow which is usual for waves 4. The resistance boxes (red) are expected to stop price action from moving any higher.

BTC/USD bullish pinbar confirms double bottom?

Bitcoin (BTC/USD) has printed another bullish candlestick pinbar:

1. The BTC/USD bullish pinbar is the second one in recent history and offers a double bottom pattern at the support trend lines (green).

2. We changed our Elliott Wave analysis to a bearish ABC (orange) pattern within wave B (green), compared to last week. 

3. Now price action is expected to make a bullish bounce within wave C (green). The Fibonacci levels are the main targets.

4. A breakout above the resistance trend lines (orange) would confirm the development within that wave C (green).

5. A larger ABC (pink) corrective pattern is expected within wave 4 (purple).

Dow Jones Index sinks again at heavy resistance

The US30 made a strong bearish bounce at the resistance zone. Let’s review what it means for the US30 chart:

1. The US30 weekly chart was unable to break above the resistance zone (orange). In fact, price action showed a strong bearish rejection (bearish weekly candle).

2. The bearish rejection confirms a lower high. Price action already made several lower lows so a downtrend is already established.

3. That said, the angle of the trend is still shallow and could easily fit within a waev 4 pattern.

4. For a stronger and more serious downtrend to be confirmed, price action will need to break below the support trend line (green).

5. Eventually a retest and break below the 50% Fibonacci is needed before a clear bearish reversal is expected (red arrows).

6. The uptrend (green arrow) is only a factor if price action is able to break above the resistance box (orange).

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The analysis has been done with the indicators and template from the SWAT method simple wave analysis and trading. For more daily technical and wave analysis and updates, sign-up to our newsletter