Yesterday we looked at the monthly chart of EUR/USD and showed the case of a long-term uptrend and that more upside pressure should be expected. Today we will look at the lower time-frame (daily) to see if that supports yesterdays conclusion.
From the daily chart we can see several supporting factors to yesterdays call for a continuation higher in EUR/USD. If we start with the possible wave-count we can count a five wave rally from the March 2020 low at 1.0636 to the January 2021 peak at 1.2359 as wave 1. We can count a nice flat A-B-C correction in wave 2 correcting 38.2% of wave 1 and we are now in the very early beginnings of wave 3 towards at least 1.3993 and possibly even higher.
Looking at the indicators, they also supports a possible long-term bottom in wave 2 now is in place as we see both a long-term hidden divergence and bullish-divergence in both the 14 day RSI and the long-term Stoch. All pointing towards a strong impulsive rally in wave 3.
Under the Elliott Wave Principle wave 3 is often the strongest of the impulsive waves and often becomes extended and a 1.618% extension of wave 1 would call for a rally to near 1.4400 in the months ahead.
We have seen the first minor resistance at 1.1801 being pierced indicating wave 2 has completed. Now we will be looking for a break above resistance at 1.1909 confirming that wave 2 has completed and wave 3 higher is in motion. A break above resistance at 1.1909 will also leave us with a failed S/H/S top and failed patterns normally indicates strong rallies in the opposite direction of the failed pattern, which in this case is to the upside.
The material has been provided by InstaForex Company - www.instaforex.comfrom RobotFX
Posts
Posts
No comments:
Post a Comment