close icon

EURUSD Reversal Seen Way Before ECB

On December 3rd, EURUSD rose sharply from 1.0540 to above 1.0980, following the European Central Bank’s decision to lower the deposit facility rate to -0.30% and ECB’s willingness to extend its asset purchasing program to the end of March 2017 or beyond, if necessary. But did we need to know what the ECB was going to do, in order to predict EURUSD’s reaction? No. And we can prove it.
On November 25th, eight days before ECB’s announcement, we published “EURUSD Back Up To 1.0800?”. While the pair was trading slightly above 1.0610, the Elliott Wave Principle suggested it was “not be the best time for new short positions in EURUSD“. The chart we used to make that forecast is given below.
eurusd 25.11.15
As visible, we assumed EURUSD is in the final stages of an ending diagonal, which is a reversal pattern. This chart was all that was needed to make us forget about selling the euro. The next chart shows how the exchange rate has been developing during the last several days.
eurusd 3.12.15
We thought 1.0800 should be seen as the first target by the bulls. Well, they not only reached it, but exceeded it by a large margin. This is another great example of the Elliott Wave principle’s ability to put you ahead of the news. Regardless of what everyone else is saying, all you need is a chart.

Recommended reading: How the Euro Was (not) Saved

So, after having successfully prepared you ECB’s “surprises”, it is time to examine the prospects once again. First of all, even though we were ready for the reversal, we certainly did not expect an explosion this big. The spike EURUSD made suggests something more than just a correction is happening. We believe December 3rd gave the start of a significant recovery. The daily chart explains why.
eurusd 3.12.15 daily
It turns out we have a W-X-Y for (A) and an A-B-C for (B). The first thing, which comes into mind, is a flat correction, shown above. If this assumption is correct, the bulls have a long way to go, because wave (C) is supposed to exceed the top of wave (A). According to this count, EURUSD might be on its way towards 1.1720 or higher.
The second possibility is a triangle. In this case wave (C) should stay below 1.1700. However, in both scenarios, the area between 1.1300 and 1.1400 is threatened. Bears, it is time you take a rest.

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Ahead of GBPUSD in Both Directions. Now What?

GBPUSD had a good run over the past six months, climbing from its 1.1412 March low to as high as 1.3483 last week. The pair is now back below 1.3000 after the latest portion of Brexit-related mess. Later in this article we will share our view of where the Pound is headed against the dollar,…

Read More »

USDTRY Set to Complete 12-Year Impulse Pattern

The U.S. dollar has been steadily climbing against the Turkish lira since 2008. Ten years later, in 2018, USDTRY reached 7.1500 on the back of geopolitical tensions and President Erdogan‘s reckless political decisions. In May 2019, however, the pair was down to 6.0600 and it looked like the Lira’s plunge might be finally over. Unfortunately,…

Read More »

EURUSD Up 420 Pips in a Month as Uptrend Resumes

The inevitable seems to be happening to the U.S. dollar. After record-breaking liquidity injections by the Fed in response to the COVID-19 crisis, the greenback is weakening across the board. The U.S. dollar has recently been declining against its major rivals, including the Yen, the pound and the euro. EURUSD, the most traded Forex pair…

Read More »

GBPJPY Bears Aiming at 120, Before Giving Up

Whether it is because of Brexit or not, GBPJPY has been trading below 160.00 ever since the referendum in June 2016. The pair has been locked in a wide range between 156 and 124 for four years now. Last week, it closed the session at 134.66, down from 138.84 at the open. In order to…

Read More »

Elliott Wave Setup Helps EURUSD Add 325 Pips

EURUSD has been under pressure for over two years now. The pair reached 1.2556 in February 2018, but has been making lower lows and lower highs ever since. Yet, the past couple of weeks painted a different picture. Between May 18th and May 29th, the euro surged 325 pips against the U.S. dollar. In those…

Read More »

EURGBP Pattern Signals Bullish Reversal Ahead

EURGBP has been in free fall since March 19th, when it rose to 0.9500. A month and a half later now, the pair is hovering below 0.8730, down 8% from the peak. Is the downtrend going to continue or should we expect a change of direction? That is the question we hope to answer in…

Read More »

GBPUSD Aiming at 1.30, but May Tumble to 1.21 First

Not long ago, we shared our long-term view of GBPUSD. In our opinion, the down-phase of the pair’s cycle, which is in its 13th year now, is almost over. One last dip to 1.1000 is likely to be followed by a major bearish reversal and the start of the next up-phase. Now, we are going…

Read More »

More analyses