EURUSD might have carved a lower high around 1.1250/60 levels today and bears might be preparing to push lower towards 1.1150/60 in the immediate short term. The currency has reversed lower from 1.1422 levels and might continue below 1.1167, going forward.
Let us look at the hourly chart and potential wave structure. The drop from 1.1422 towards 1.1167 has been in 3 waves, hence corrective (a-b-c) here. The subsequent rally towards 1.1348 was also corrective, wave x on the chart here.
If the above structure is just a part of a larger wave, EURUSD will ideally remain below 1.1348 and continue drifting lower. The immediate price target is seen towards 1.1150/60 levels, which is fibonacci 0.618 extension of lower degree waves I to iii from 1.1348 highs.
Alternately, if EURUSD bulls are inclined to remain in control, the single currency will stay above 1.1167 interim lows, and continue higher above 1.1348. Also, bulls will be targeting to print above 1.1500 resistance before producing any meaningful correction.
The critical levels to watch out for are 1.1167 and 1.1348 respectively. EURUSD needs to break the above price range to confirm its next move. High probability remains for a drop lower to 1.1500/60 levels before producing any meaningful retracements.
Earlier, EURUSD had rallied from 1.0636 lows through 1.1150 levels (not seen here). Going further, a sideways consolidating triangle was produced, followed by a sharp rally towards 1.1422 levels. The above structure is corrective and hence bears might be inclined to take control back from here.
Traders might remain inclined to sell at a higher price (1.1275/80) going forward, with stop above 1.1348 and potential targets below 1.1000 levels. A break below 1.1150 from here would be extremely encouraging to bears, going further.
Technical Analysis Team
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