Greetings friends, today I’m going to focus a little bit more on EURUSD as I believe it is at a crucial turning point. Last week I posted here an analysis calling for a bullish wave scenario in the Dollar index. If you have been reading my daily USDX analysis here you would have been informed of my 92.50 target. Price was reached yesterday and we got a reversal. Same with EURUSD. I was targeting 1.1850-1.1950 and price yesterday reached 1.1960 and reversed below 1.19 right now. Price reached the 78.6% Fibonacci retracement of the entire decline and is now trying to break back below the 4 hour Ichimoku cloud support.
The bearish divergence warning signs were shouted publicly on twitter the last couple days. So what EURUSD bulls do not want to see and what Bears like me want to see in order to be more confident of our bearish EURUSD (Bullish $) view? First sign would be for price to enter the red rectangle area. If this happens, in Elliott wave terms, the pull back we are currently in could not be a wave 4 correction. If the entire upward move from 1.1550 is just a 3 wave correction, then another 5 wave decline should follow that would need to break below 1.1550. 2nd level that we need to see broken is the last important low and the start of the recent upward move. This is shown by the black rectangle area at 1.17. Breaking below 1.17 the chances of my bearish EURUSD scenario will increase dramatically, as the alternative wave scenarios that support a bullish EURUSD, will get canceled.
We can not ignore the topping signs we have seen the last couple of sessions. EURUSD is expected to move lower….but will it repeat the small pull back and upward reversal to new highs as the last 2 times or will it start a bigger trend lower towards 1.14? I believe the latter scenario is more probable.
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