EUR/USD – 1.1740
EUR/USD: Wave (c) of 2 ended at 1.3993 and wave 3 of III has commenced for weakness to 1.0411 (1.236 of wave 1), then 1.0000.
The single currency retreated after meeting resistance at 1.1847 earlier this month, retaining our view that minor consolidation below recent high at 1.1910 would be seen and risk of another corrective fall to 1.1662 is likely, however, reckon 1.1590-00 would limit downside and bring another rebound later, above said resistance at 1.1847 would signal the pullback from 1.1910 has ended, bring retest of this level. Once this recent high is penetrated, this would confirm medium term rise from 1.0340 (wave 3 trough) has resumed and extend gain to 1.1950, then 1.2000-10, break there would encourage for further gain in wave 4 to 1.2100 but price should falter well below 1.2220-30, bring retreat later.
Our preferred count on the daily chart remains that a wave (II) 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. The decline from there is a 5-waver (C) with minor wave (i) of I of (C) ended at 1.4218 with wave (ii) ended at 1.4580, wave (iii) ended at 1.3267 and wave (iv) ended at 1.3692 and wave (v) ended at 1.1876, this is also the low of wave I of (C) and wave II ended at 1.4940, hence wave III is now in progress with a diagonal wave 1 ended at 1.2042, the breach of previous support at 1.1876 (wave I trough) adds credence to our view that the wave 2 has ended at 1.3993, wave 3 has commenced for further weakness to 1.0411, then towards 1.0000.
On the downside, whilst another corrective fall to 1.1662 is likely, reckon downside would be limited to support at 1.1613 and renewed buying interest should emerge around previous resistance at 1.1583 and price should stay well above support at 1.1479, bring another upmove later. A drop below said support at 1.1479 would signal a temporary top is formed, bring correction of recent upmove to 1.1400, then 1.1370 but support at 1.1312 should remain intact.
Recommendation: Buy at 1.1600 for 1.1800 with stop below 1.1500
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 reversal has taken place with (I) leg ended at 1.2329 and once (II) ended at 1.5145, wave (III) itself is an extended move with I: 1.1876 and complex wave II ended at 1.4902, wave III has commenced with wave 1 and 2 ended at 1.2042 and 1.3993 respectively, wave 3 of III is now unfolding for weakness towards parity.
