EURUSD chart offers one of the most chaotic price actions in terms of Elliott Wave. Our initial long suggestion on 1.0955 levels was invalidated only with few pips due to Mario Draghi’s speech, only to be followed by a strong rally to the 1.1390 levels, turning to the second invalidation point which just got hit today when EURUSD broke 1.1378.
If (2016) December up to February 11 price action was an A-B-C, part of a triangle wave 4 correction, 1.1378 high should have not been taken out. This action opens doors to an alternate wave count as in the chart below.
Invalidation point for the bearish scenario of EURUSD is 1.2040, wave 1 bottom. Fibonacci’s extension points for wave C to top around 1.1807 levels, if wave C is to extend equally to wave A.
In the mean time, we will attempt intraday trades with tight stops until the picture becomes more clear for the longer term.
Trade idea: We are currently short at 1.1392, with SL= 1.1412 (Day’s High) and Target 1.1358.
We decided to enter short once the upper Bollinger Band was touched and it was followed by an immediate selloff. Since EURUSD failed to breach the median and AO was in our favor, this setup was even more favorable.
We are looking to close around 100% Fibonacci Extension with a risk reward 1.7.