close icon

Time for EURUSD Bulls to Shine Again?

EURUSD rose after the ECB policy announcement on December 3rd, then fell following the FED’s decision to raise the interest rates on December 16th. Should we wait for the next major statement from the US or the European Union? Is it possible to get a clue about where the EURUSD exchange rate is most likely to be aiming next, without having to wait for Mario Draghi or Janet Yellen to speak? We believe it is, by applying the Elliott Wave Principle to the hourly chart of the pair, shown below.
eurusd diagonal 19.12.15
The rally between 1.0540 to 1.1060 seems to be a leading diagonal. Leading diagonals are very similar to ending diagonals, except for the fact that they occur in the beginning of the sequence, instead of in its end. This means you could expect to see a leading diagonal in the position of wave 1 of an impulse or wave A of an A-B-C zig-zag correction. And just as every regular five-wave impulse is followed by a three-wave correction in the opposite direction, every leading diagonal is supposed to be retraced in three waves, before the larger trend could resume. This is exactly what we believe is visible on the above-shown chart. If this assumption is right, EURUSD could be expected to start rising from now on, since the 5-3 wave cycle seems to be complete and wave (3/C) to the north should take the rate much higher.
However, this is not the only way to count EURUSD’s price action. Another probable scenario is given on the next chart. Fortunately, it is bullish again.
eurusd flat 19.12.15
According to this possibility, wave (1/A) ends at 1.0980. The rest is an unfinished expanding flat correction. Three waves down for A, three waves up for B to a new high, and five waves down for C is the desired wave structure of every expanding flat. If this is the correct count, we should expect one more bottom in wave 5 of C of (2/B), before the bulls finally return.

Recommended reading: EURUSD Reversal Seen Way Before ECB

Both counts are equally probable. Luckily, both of them are pointing up, so , in our opinion, the sell/buy dilemma is out of the equation. The invalidation level for both counts is far down at 1.0540. Having in mind the strength, demonstrated by the support area near 1.0800, we see no reason to worry about it now. As long as it is safe, EURUSD could be anticipated to climb to 1.1100 or even higher.

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