EURUSD is seen to be trading close to 1.1290 as we prepare this article and is expected to resume lower towards 1.0930 levels at least, in the short term. Intermediary resistance is seen around 1.1400 level, the June 09, 2020 high, and rallies are expected to remain capped below that.
Let us have a look at the short term wave counts presented on the hourly chart. The EURUSD had carved a potential top around 1.1400 levels in early June 2020. The drop between 1.1400 and 1.1167 can be marked as Wave 1 or A.
The subsequent rally towards 1.1350 had reached the fibonacci 0.618 retracement of the above drop (not shown here). This could be marked as potential Wave 2 or B. Since then, EURUSD might be unfolding a potential Wave 3 or C, which should drop towards 1.0930 levels at least. Interim support is seen around 1.1167, and a break below that will accelerate the drop.
Looking at the lower degree probable wave counts since 1.1350 swing highs, EURUSD might have carved waves I and iii around 1.1190 and 1.1300 respectively. If the above counts are correct, a lower degree wave iii is underway since 1.1300.
Alternately, if EURUSD breaks above 1.1350, it could face resistance around 1.1380 levels before reversing lower again. But a continued rally towards 1.1400 would change the proposed bearish structure here.
Overall, traders might be inclined to initiate shorts around current levels, (1.1280/90), place protective stops around 1.1400 and project lower towards 1.0930 at least. A break below 1.0775 would threaten to test 1.0636.
Technical Analysis Team
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