EURUSD continues to test the 1,33 resistance where the 61,8% and 76,4% Fibonacci retracements are. If prices manage to break above the resistance at 1,3310, the bulls will be in control once again. The upward sloping green trend line should not be broken for the bullish sequence of and higher lows to continue. The downward move from 1,3345 is impulsive whereas the upward move from 1,3188 looks like a three wave corrective pattern. That is why we start looking for the bearish potential near these Fibonacci retracement levels.
We are bearish biased expecting prices to break below the green trend line and cancel the sequence of higher highs and higher lows. We need support at 1,3250-40 to be broken and if that happens we expect prices to test 1,32. The safest way to play it according to Elliott wave theory is to wait for a support to fail. If the upward move from 1,3230 fails to produce an wave pattern, this will be our signal to go short. This happens if prices break the upward green trend line and if prices fall below 1.3240.
Concluding we are cautiously bearish as long as prices trade below 1,33. Breaking support will be a sign that our view is confirmed and we could add to short position if support fails.
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