EUR/USD Elliott Wave Analysis

EUR/USD – 1.3720

EUR/USD: Wave v of (c) ended at 1.5145 and fall to 1.3745/50 is underway

Although the single currency recovered after finding renewed buying interest at 1.3530 earlier and further consolidation above recent low at 1.3433 is likely, retracement should be limited to 1.3871 (38.2% Fibonacci retracement of 1.4580 to 1.3433), however, strong rise beyond there should not be repeated and euro shall turn back south again from there in wave (iii) later this month. Below 1.3433 would extend weakness to 1.3405 (61.8% Fibonacci retracement of entire rise from 1.2329 to 1.5145), then towards 1.3300 and 1.3200 but reckon 1.3080 (1.618 times projection of wave (i)) would hold.

Our preferred count on the daily chart remains that a wave (B) from 1.2329 ended at 1.5145 with A-leg ended at 1.4720, followed by wave B at 1.2457, the wave C from there was also a 3 legged move and is labeled as (a): 1.3739, (b): 1.2885, the wave iii of the 5-waver (c) from 1.2885 has ended at 1.4339 and wave iv is a triangle ended at 1.3878 and wave v formed a top at 1.5145.

Therefore, the decline from there is the beginning of the wave (C) with minor wave (i) of (C) ended earlier at 1.4218 with wave (ii) ended at 1.4580, hence wave (iii) has commenced from there with minor wave i of (iii) still in progress to aforesaid downside targets.

On the upside, only above resistance at 1.4027 resistance would confirm temporary low is in place, then correction to 1.4190/00 would follow but resistance at 1.4218 (wave (i) trough) should hold.

Euro's long-term uptrend started from 0.8228 (26 Oct 2000) with an impulsive structure. The rise from 0.8228 to 0.9593 (5 Jan 2001) is labeled as wave I, the retreat to 0.8352 (6 Jul 2001) is wave II and the rally to 1.3670 (31 Dec 2004) is wave III. Wave IV from there ended at 1.1640 (15 Nov 2005), the subsequent upmove to 1.6040 (July 15, 2008) is treated as wave V, the major selloff from the record high of 1.6040 to 1.2329 (October 27, 2008) signals a correction of the long-term uptrend has taken place with (A) leg ended at 1.2329 and once (B) wave finishes, wave (C) will take euro lower and below 1.2329 confirms and extends to 1.2136 (50% Fibonacci retracement) and 1.2000.