In this analysis of EURUSD we will look at the price action from two angles – conventional technical analysis and then the Elliott Wave Principle. As you will see, the two methods confirm each other, giving us a one-sided view for the Euro versus the US dollar. First we will examine the conventional point of view, where we need only two trend-lines, in order to form an opinion.
As you can see, we have drawn a rising trend-line, from which price had bounced up three times during the past 10 months, which makes it a major trend-line and important dynamic support. But this major support has been broken yesterday, May 9th 2014. This is the first bearish sign for EURUSD. The second one is the declining slope, pointing out that the trend is exhausted. So, according to the conventional technical analysis, this pair may already be in bear’s paws. Now, if we want to be more precise about out forecast, we might want see how an Elliottician would interpret the situation. Below you will see the same chart, labeled.
Looking through Elliott’s eye, we see that the whole price action is corrective. Corrections are movements against the larger trend, which means that sooner or later, the whole rise from 1.2035 should be retraced, because the larger trend is down. Our bearish expectations are further supported by an ending diagonal in wave C of (Y), which has been broken to the downside. Considering our weekly chart analysis, made on April 16th 2014, we think that Thursday’s top of 1.3994 is likely to be the last one for the next two or three years for EURUSD.