EURUSD might have already carved a meaningful top around 1.2000 levels on September 01, 2020. The currency has dropped over 250 pips since then, hitting lows around 1.1750 mark over the last week. Further it has also produced a counter trend rally towards 1.1914 mark.
EURUSD might turn lower again, as long as prices remain below 1.2000 mark. Bears might remain inclined to stay in control over the next few weeks and push lower towards 1.1200 levels at least. Possibility also remains for a continued drop though March 2020 lows at 1.0636.
EURUSD probable wave counts are as follows: The currency had rallied from 1.0636 lows in March 2020, through 1.2000 highs in September. The rally can be clearly subdivided into 5 waves, making it an impulse (complete rally not seen here).
Ideally, EURUSD should be followed by a corrective drop unfolding as a zigzag or flat towards 1.1200 handle. Also note that 1.1200 is very close to fibonacci 0.618 retracement of the entire rally between 1.0636 through 1.2000 respectively.
Hence probability remains for a bullish reversal from close to 1.1200 handle. If the above structure unfolds accordingly, EURUSD might rally towards 1.2500 levels thereafter. Alternately, a drop below fibonacci 0.786 retracement seen at 1.0950, would threaten to push further lower.
Traders might be preparing to initiate short positions through 1.1920 mark, with a protective stop above 1.2000 handle and projected targets below 1.1200 respectively.
Technical Analysis Team
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