Executive Summary
- EURUSD pivoted near an important support level
- Bullish forecast is valid so long as EURUSD holds above 1.0601
- Upside targets include 1.12 and 1.15
Aggressive EURUSD Decline Halts at Support
EURUSD appears to be building a large bullish sequence. Back in April, we called out a bullish turning point for the end of minor wave 2.
Now, it appears EURUSD is finishing its next smaller degree wave 2.
EURUSD has been on an aggressive decline this week down about 1%. From the June 4 high, EURUSD is down about 200 pips.
Earlier today, the decline abruptly halted and has begun to reverse at the 1.0668 low.
There are a few elements of support in this zone that are supporting prices.
First, the blue trend line connecting the highs from March 2024 passed through today’s support zone.
Additionally, the 78.6% Fibonacci retracement level of the April to June rally sits at 1.0668.
Lastly, there is an equal wave relationship during this two-week decline at 1.0657.
As a result, EURUSD may be on the front edges of starting a rally that could reach 1.12 and possibly 1.15.
Current Elliott Wave Pattern
It appears that today could have marked the end of wave ((ii)) of 3. This means wave ((iii)) of 3 is beginning and would trend towards 1.12 and possibly 1.15.
Wave 3 tends to be the strongest wave of the Elliott wave sequence and the wave that is about to begin would be a third wave at two degrees of trend.
The 1.12 target level is derived by taking the 1.618 Fibonacci extension of wave ((i)) and applying it to wave ((iii)).
This bullish forecast would hold so long as EURUSD remains above 1.0601.
Alternate EURUSD Elliott Wave Count
In the unexpected decline below 1.0601, or, with the inability to rally above 1.09, then we’ll consider this alternative wave count.
The alternate Elliott wave count suggests a break of 1.0601 would then lead to a retest of 1.0448 as a W-X-Y double combination correction.
In the alternate scenario, the current wave would be wave ((d)) of X where wave X is a triangle. This would imply one more fake rally that holds below 1.0916 to finalize the X-wave.
After wave X triangle concludes, then another decline in wave Y would finish this multi-year corrective pattern.
Bottom Line
EUR/USD appears poised to stage a bullish reversal in a third wave at two degrees of trend. If so, then EURUSD would have to hold above 1.0601 en route to 1.12 and possibly 1.15.
If 1.0601 breaks, then EURUSD likely trends lower to 1.0448.
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