The EUR/USD made a bearish bounce as expected after completing a bullish ABC (purple) zigzag pattern within a larger wave W (pink) correction. A bearish correction is now taking place most likely and is taking price back towards the Fibonacci retracement levels of wave X vs W.
The EUR/USD is now testing the support trend line (blue) and a bearish break will probably create complete an ABC correction within wave X (pink). Price is expected to bounce at the Fib levels if it is indeed building a WXY correction (pink). However, a break below the bottom and 100% Fib makes this wave pattern less likely.
The EUR/USD is building an ABC pattern. A bearish break could indicate that the wave C is not yet finished whereas a bullish breakout could indicate a new bullish push. A bearish break below the neck line (blue) could confirm a potential head and shoulders reversal chart pattern (purple boxes).
