Less than two weeks ago, on May 6th, we published “EURUSD Parity Still Possible?”. With the EUR USD pair at 1.1236, we were expecting the exchange rate to climb above 1.14 and reverse to the downside. Here is how this forecast looked like 12 days ago.
As visible, we were waiting for wave 5 of C of a larger flat correction wave (B). Today, we might already have an idea of what shape wave 5 is going to take. You can see it on the hourly chart of EUR USD given below.
So far, the fifth wave of C appears to be an ending diagonal. This is a reversal pattern, so it fits the bearish idea perfectly. The diagonal will be confirmed, when its lower line is broken. More conservative traders may prefer waiting for the bottom of wave iv to give up. Once we have a confirmation, the invalidation level is at the top of wave v of 5. With targets below 1.0450, it is a pretty good risk/reward ratio. If this is the correct count, the bears seem to be ready to return in EURUSD.
