Simple Moving Average(SMA) 50-period (red), 200-period (bold, gray)
RSI-14 with Simple Moving Average 5-period of RSI attached.
Elliott Wave Principles
Market and Price Action (patterns, candlesticks)
Intraday pivots and Intermediate-term support and resistance
Multiple Time-frame Analysis
- The EUR/USD continues to decline after the NFP, and as noted from last week, was unraveling in a bearish impulse wave.
- The RSI broke below 30, but is now developing bullish divergence as the market attempts to resolve the oversold conditions in the near-term. In the short and intermediate term, the market has shown topping. The important support at 1.3540 looks to be broken today, but I suspect it may not confirm right away. We might have another pullback.
- A pullback is expected since we have completed an impulse wave, and possible one corrective leg in wave a, which is composed of (a)(b)(c). This was held below 1.3630 (61.8% retracement of the post-NFP reaction.
- We are thus likely in a wave b right now, and not the start of the bearish continuation. Therefore, we can expect a pullback in the form of a wave c.
- When the RSI dips back below 30, and price level gets near 1.35, there can be an anticipated rally again to test this 1.3630 high or a bit higher in an expanding flat. There could also be a failure to reach the 1.3630 level, and another scenario yet is a meaningful one up to 1.3740. The market should not break above 1.3750 in our bearish scenario.
- The bearish scenario can be seen in the 4H chart, first with a test of 1.34, then 1.3250.
- Further break below opens up the 1.30/1.29 lows of Dec. 2010, and Jan. 2011.
Has the EUR/USD topped off, will there be a flat, zig zag, or complex correction, or will it be muffled for an extended decline without much retracement? We would love to hear what you think.
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Fan Yang CMT
Chief Technical Strategist