Weekly Waves: EUR/USD, Dow Jones and Bitcoin

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EUR/USD testing key 78.6% Fibonacci level

The EUR/USD is making a quick decline – as expected last week – but will the EUR make a bullish bounce at the support? Let’s review:

  1. The EUR/USD bearish impulsive price swing was expected. Price action has reached the 61.8-78.6% Fibonacci support levels.

  2. The Elliott Wave analysis indicates either an ABC (yellow) pattern of a larger bullish ABC (pink) correction OR a downtrend continuation via a 123 (orange).

  3. The main aspect to keep an eye on is the price pattern that develops at the deep Fibonacci retracement levels.

  4. A bear flag pattern (orange arrows) indicates a higher chance of a downtrend. In this case, price action probably already completed an ABC (orange) in wave 4 (gray) and price action is moving lower in a 123 (orange).

  5. A stronger bullish rebound, however, would indicate a larger ABC (pink) pattern in wave 4 (gray) and a downtrend after a bullish correction takes place.

  6. A downtrend usually should aim for targets at 1.0250 and parity (1.00).

BTC/USD dramatic bearish breakout fuels downtrend

Bitcoin (BTC/USD) created a consolidation pattern and made a bearish breakout to lower price levels:

  1. The BTC/USD was unable to break above the 38.2% Fibonacci resistance level. The corrective pattern took two weeks to complete before price action dropped.

  2. The bearish breakout below the support trend line (dotted green) sparked yet another sell off in Bitcoin – after a larger downtrend had already emerged.

  3. The correction is probably a wave 4 (yellow) because a choppy and shallow retracement is typical for such Elliott Wave patterns.

  4. The wave 5 (yellow) could be completed if price action reaches the -27.2% Fibonacci target around the round level of 20k.

  5. The wave 5 could complete a larger ABC (gray) pattern. A bullish bounce (green arrows) could complete a wave B (gray) before another wave C.

US30 sees new round of selling again

The US30 stock market found another resistance spot on the chart, which sparked yet another sell-off:

  1. The US30 chart is in a downtrend as expected. A new lower high has been confirmed and price action is now testing the 23.6% Fibonacci retracement level again.

  2. The downtrend channel is very sturdy and tested but considering the strength of the bears, a push below the support lines (green) of the channel could occur.

  3. A further decline to the 38.2% Fibonacci retracement is expected.

  4. A few bullish rebounds are expected along the way. But in most cases, the bullish retracements should hit resistance levels within the channel and past support and make a bearish bounce.

  5. A bearish ABC (pink) pattern is expected to take place in a larger WXY (gray) of wave 4 (purple).

The analysis has been done with the indicators and template from the SWAT method simple wave analysis and trading. For more daily technical and wave analysis and updates, sign-up to our newsletter