Is the Euro's Rally Over?
Having risen from the 1.2000 level last July to the 1.3700 level last week, political concerns seem to have dampened the euro’s rally, as Yohay Elam of ForexCrunch.com offers a preview of what to expect before Thursday’s ECB meeting.
24 hours back we were still observing bullish counts on EUR/USD, but the sharp fall invalidates it, which means that something is changing. Notice that the pair reversed from its highs in a clearly impulsive fashion through the channel support line of the latest bullish run, connected from 1.3262.
The pair closed well bellow that trend-line, which is important evidence for a temporary change in trend. As such, we need to respect this price action and immediately re-adjust the wave counts. The current structure suggests that EUR/USD will make a minimum three-wave decline from 1.3710, because this is the minimum structure of a corrective price action.
Ideally we will see a simple zig-zag, labeled as an A-B-C move. Currently, the price is still falling within wave A so we will see more sideways and bearish price action beneath 1.3400 and possibly to 1.3315 triangle pivot level after a wave B pull-back, which will probably unfold ahead of the ECB rates decision on Thursday.
By Yohay Elam, Founder, Writer, and Editor, ForexCrunch.com