The financial markets have reacted to the political drama that is happening this week. On Tuesday we saw in our charts a strong bearish movement in the S&P500 pushing the dollar higher. On Wednesday the political history takes a dramatic turn, and the market goes up. On Thursday, an informant reveals secret information, and the market falls again and the dollar skyrockets. A unique week, chaotic and with a good script for a Hollywood film. In this report, we will see the EUR/USD and Dollar Index from the Elliott Wave point of view.
EUR / USD VS Dollar Index
In the Dollar Index chart, we can appreciate the strength of the dollar, according to the Elliott Wave analysis, the minimum objective is 99.34 (resistance where the “iii” wave – black ended). Meanwhile, in the EUR/USD, we see a very similar structure. Because the USD is on the right side of the quote while the dollar goes up, the EUR / USD goes down.
The EUR / USD has managed to reach the support where the “iii” wave – black ended faster. It is expected to continue going down during the next week. In the medium term, we expect the price to impact the 1.0800 support at the lowest level in the last two years.
EUR/USD VS Dollar Index Chart
A look at the EUR/USD
In the four-hour time frame, the fall is evident. The 1.0926 support did not withstand the price pressure and collapsed. There is no interest from buyers entering the market because no bullish activity showed.
There are only red candles where bears are in control. When such a strong movement appears, the Elliott Wave theory indicates that a wave three is in progress and it is the most powerful wave of the cycle.
The wave “(3)” – orange, aims at the Fibonacci 161.8% (1.0880) projection of the three vs. one ratios. Then we can expect a slight bullish rebound to test resistance 1.0926 for the fourth wave orange. At this moment the fifth bearish orange wave will begin until zone 1.0860. All this to complete an ABC of higher degree check the chart to see the projection. We expect the price to reach 1,0800 next week.
4 Hours Chart – Elliott Wave EUR/USD
We recommend following the bearish movement and adequately managing the risk with a maximum risk of 2% per trade. We wish you many successes in your trades. When you add to your trading the robust Elliott Wave analysis, you will feel the difference from the first day.