Executive Summary
- One pattern implies an incomplete bearish pattern that may reach 1.0220-1.0270
- A second pattern implies an important low was reached on November 22 at 1.0330
- Two main EURUSD Elliott wave patterns suggest a rally to 1.0610-1.0670
EURUSD Downtrend
On Friday, November 22, EURUSD spiked down to a low of 1.0331, then began to rally.
There are a couple of Elliott wave counts we have been following that anticipated a decline to these levels.
Back on November 4, just before the US Presidential election, we shared two wave counts and both counts called for a brief rally and continuation of the decline.
We stated:
“EUR/USD appears to be in a corrective bounce higher that may carry it up to 1.1000-1.1115. EURUSD does not have to reach 1.1000. Once this top is found, then a resumption of the downtrend presses EURUSD to 1.0450 and possibly 1.0300.”
Support Bounce May Be Temporary November 4, 2024
On Wednesday, November 6, EURUSD rallied to 1.0937, just below the low end of the target range and fell hard reaching the low of 1.0330 on November 22.
The two wave counts we were following forecasted that move. After tagging the low at 1.0330, these wave counts diverge in their trend direction.
One wave count calls for a temporary relief rally, then another jab at new lows in the 1.02 handle. The secondary wave count calls for a long-term low to be established at the 1.0330 low.
Let’s unpack each of these counts.
Temporary Relief Rally in EURUSD?
The first wave count we’ll unpack is that the low from November 22 is the end of wave ((iii)) of C of (2). This means a small rally in wave ((iv)) would develop to about 1.0610-1.0670. After wave ((iv)) is completed, then wave ((v)) of C would push to new lows below 1.0330. We are showing some wave relationships appearing between 1.0220-1.0270.
Therefore, this wave count calls for a rally into the 1.0610-1.0670 then a decline to 1.0220-1.0270. This doesn’t mean that EURUSD has to rally that high or decline to the stated levels. But using the geometry of the Elliott wave patterns, these are price zones where pivots may appear.
The Downtrend in EURUSD is Complete?
The second wave count we’ll highlight is that EURUSD completed a W-X-Y pattern at the November 22 low. Therefore, it is poised to rally for multi-months above 1.12 and possibly higher levels.
This pattern suggests the next rally would be of similar size or Fibonacci proportions to the September 2022 to February 2023 rally. That rally was approximately 1500 pips. Therefore, the next rally could be 925 pips (61.8% of 1500 pips), 1500 pips (100% of 1500), or 2425 pips (161.8% of 1500).
This would place targets near 1.1250, 1.1825, and 1.2750. As you can tell from those targets, this W-X-Y wave count implies an important low is at hand.
What Do These Wave Counts Have in Common?
Both wave counts call for a rally that could reach 1.0610-1.0670. If EURUSD rallies much above 1.0700, then we’d begin to favor that an important low is in place as the W-X-Y count suggests.
If EURUSD turns lower from the 1.06 handle and approaches 1.0330, then we’d favor that wave ((v)) is developing to the downside, possibly reaching 1.0220-1.0270.
Bottom Line
I suspect EURUSD will rally to 1.0610-1.0670 to satisfy both wave counts. From there, we’ll look for clues if a top appears as wave ((iv)) of a 5-wave decline or if a rally persists after an important bottom on November 22.
A rally above 1.0700 begins to favor an important low in place while a bearish turn near 1.0610-1.0670 hints at a wave ((iv)) top.
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