In our last analysis we were expecting an upside move in EURUSD and the pair really did rise, but the rally was limited to only three waves, suggesting that we are still in some kind of a corrective pattern. Below you can see an updated chart with a little relabeling. The corrective pattern, that started from the top at 1.3906 still looks like a zig-zag retracement, but this time we are considering a triangle in wave (b) of “B”.
Triangles precede the final move of the sequence. If this is the correct count, we should now expect a decline to the 1.3760 zone in wave (c) of “B”. However, on the 1-hour chart of EURUSD we are still bullish, so once that 61.8% Fibonacci level is reached, the uptrend should be restarted with 1.40 being the next target. Of course, Fibonacci levels can be used only as guidelines, not firm rules. This means that the wave (c) decline could extend lower than 1.3760, but prices have to stay above 1.3670, because that is where our invalidation level is. In other words, this is the place where the protective stop should be, if we decide to go long after the end of “(c)”. On the other hand, if wave “e” moves above wave “c” of the triangle, we will immediately return to our previous count without having missed much of the move. That is why each trade has to be closely observed and alternative counts considered.