EUR/USD forecast

   The pair is being traded along the “C-C+” side downtrend, which in fact is a “flag” trend-continuing figure that has a five-waved structure (in Elliot’s notation). Currently the 4th wave is supposed to be completed, and the 5th one to be started aimed at dropping to accumulation of supports 1.2766–1.2660.

 

   The level, which the pair is being traded at, is a key level because the pair can either go down in the 5th wave, or get over the higher bound of the “flag” figure (1.3350) and then go to resistance level 1.3550. Hence, we will consider two variants of events to develop: #1 – main and #2 – alternative.

   #1. The 4th wave is completed; in the 5th wave the pair goes to accumulation of supports 1.2766–1.2660. Development of this variant requires the pair to go under level 1.3190, and then under a key support 1.3010.
   #2. The higher bound of the “flag” figure (“C+” trend line) is unable to keep the pair from growing, so after rising above level 1.3350 the pair will head to resistance 1.3550.

 

 

   Variant #2 is the one I like less, because after leaving the “flag” figure the pair has to rise to level 1.3700, but there is a huge obstacle on the way up – “D+” trend line (level 1.3550), which passes through points of 07/15/08 and of 12/18/08. This is a very strong and important trend line, which can be broken only by a very strong ascending impulse, which obviously is absent at this moment, when the pair is being traded within a correctional wave at H4 graph.

 

   Variant #1 is more favorable for following reasons:
   1. Rising higher than 1.3550, the pair won’t get to 1.3700 due to support at 1.3550. Hence it needs to get down to 1.2890 or below, before it will eventually gain strength and develop a strong ascending impulse.
   2. The 3rd wave’s completion was caused by the bounce off support level 1.2890, and now the pair is bouncing off higher bound of the “flag” figure, which is identical to level 1.2890 in aspect of strength. So, why wouldn’t the pair complete the 4th wave now, if we also take to account that it’s being traded with a descending attitude?
   3. Bounce off the “C+” trend line is accompanied by a turning candle model development, what amplifies the descending potential. And at H4 graph we see that this model is nothing but a “double top” trend-turning figure.

 

 

 

   The pair is being traded along the “B-B+” correctional uptrend, it is set against higher bound of the “flag” figure – “C+” trend line (1.3270). A “double top” trend-turning figure is being formed. There are two variants of events to develop:

 

   #1 Main. Upon getting under level of support/“double top” figure’s basis 1.3190, the pair will head to level 1.3010 – “B-B+” trend’s lower bound. Upon getting under 1.3010, the pair will reach accumulation of supports between levels 1.2760–1.2660 (key level).

 

   #2 Alternative. The pair rises above level 1.3350, in such case it will reach resistance 1.3550 (“D+” trend line).