Bottom line: EURUSD bullish structure remains firmly intact against 1.0778 lows. After hitting 1.1500 resistance today, expect a corrective drop lower towards 1.1100 levels at least.
Technical Analysis:
EURUSD remains in control of bulls as conquer 1.1500 levels after one year of the ending diagonal pattern that started in March 2019. The rally between 1.0778 and 1.1500 has unfolded sharply as expected after the diagonal terminated and has traveled all the way towards the beginning of the ending diagonal. This is a classic example of expected price action after the diagonal termination. Most traders might have missed the last leg rally and might be preparing to buy again on dips towards 1.1050/1.1100 levels. As discussed earlier, EURUSD has managed to carve a meaningful bottom at 1.0778 earlier and it should hold for several months as traders prepare to follow up on the impulse wave produced between 1.0778 and 1.1500 respectively. The recent rally could be labelled as Wave 1 of a projected 5 wave rally or it could be Wave A of an A-B-C corrective rally. In either case, EURUSD bulls might have formed an intermediary top at 1.1500 levels and a corrective drop could be expected to resume soon. A zigzag structure (5-3-5) is expected to form during the next few trading sessions and drag prices at least towards 1.1100, which is also previous wave iv termination. Furthermore, it could drop towards 1.1050, which is the Fibonacci 0.618 retracement of the recent rally labelled as Wave 1 here. Since the trend is religiously up after completing an impulse, most traders might be willing to buy on dips rather selling on rallies. Please also note that the corrective drop could be shallow and may not reach 1.1100 or 1.1050 mark as expected. Hence it might be safe buy on dips against 1.0778 levels.
Prepared by
Harsh Japee, Technical Analyst.
EURUSD Chart
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