No-one would argue, that despite the optimistic first five months, the bulls on EURUSD were pretty much slaughtered this year. The never-ending clash between buyers and sellers will inevitably continue in 2015 as well. But which team is more likely to win the battle next year?
“EURUSD should be near a major reversal point and we still think that 2014 could be a very bad year for the European currency.” This is taken from a forecast, called “EURUSD Still On Schedule For a Crash”, which we published on March 30th, 2014. When the pair was trading around 1.3750, we were expecting it to reach the 1.40 mark, but not much higher. Our long-term target was and still is between 1.15 and 1.10. Less than three weeks later, on April 16th, the situation became even clearer, so we published an update, titled “EURUSD May Fall Even Sooner”. The next chart will show you how our forecast of EURUSD looked like 8 months ago.
Eight months is a lot of time, which makes the task of making a forecast very difficult, regardless of the field. However, if you have been following the euro against the US Dollar, you should know the pair has been trading right according to the forecast so far. 2014 was, indeed, a very bad year for the European currency. The updated chart below proves it.
As you can see, the EURUSD exchange rate reached 1.40 (1.3994) on May 8th and then crashed to 1.2246 as of December 8th. A sell-off of roughly 1750 pips. But the question remains. What to expect in 2015? Pay attention to the wave structure of the decline. It is a five-wave impulse. According to the Elliott Wave Principle, every impulse is followed by a correction in the opposite direction, after which the trend resumes in the direction of the five-wave sequence. So, this means that 2015 is likely to begin with some good performance by the bulls. Unfortunately, their optimism should not last long. There is a strong resistance zone between 1.28 and 1.30, which could bring wave B to an end. This same area could give the start of the next slump in the face of wave C, which, if we consider the big picture scenario, should lead EURUSD close to 1.10.
