EUR/USD Elliott Wave Update: Wave Five Extension Targets 1.1910
Original analysis by: Ross J Burland | FXStreet
The EUR/USD currency pair remains in a compelling technical position, guided by Elliot Wave theory. With bullish momentum continuing to push the pair higher, the latest analysis indicates that EUR/USD is poised for an extended move to the upside, targeting the 1.1910 level as part of its fifth wave progression. Below is a detailed examination of the Elliott Wave structure for EUR/USD and the factors supporting this bullish outlook. This article expands on Ross J Burland’s insightful analysis originally published on FXStreet.
Elliott Wave Theory in Action
Elliott Wave Theory is a form of technical analysis that traders use to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology, highs and lows in prices, and other collective activities. According to this theory, market prices unfold in specific patterns, or “waves.” This structure consists of impulse waves that move in the direction of the larger trend, followed by corrective waves that move against that trend.
Currently, EUR/USD is believed to be completing a five-wave impulse move to the upside:
1. Wave 1 initiated the trend with a breakout from a multi-month range
2. Wave 2 provided a corrective retracement, typical in Fibonacci percentage terms
3. Wave 3 was powerful and extended, often the most dynamic in an Elliott sequence
4. Wave 4 consolidated recent gains, offering a platform for the next move higher
5. Wave 5 is currently developing, with projections indicating a target near 1.1910
Analysis of Wave Formation
Wave Five: The extension scenario assumes that wave five will stretch further than initially anticipated. The key technical argument lies in the previous wave formations and how bullish the momentum has remained since the beginning of the year.
– Wave 1 set the tone by marking the breakout through the 1.0740 resistance zone
– Wave 3 was sharp and strong, which is typical of a third wave in Elliott structures
– Wave 4 appears to be shallow, a common occurrence when wave 2 was more significant
– Current price action within wave 5 suggests early stages of elongation, evidenced by successive higher highs and higher lows
Technical Indicators Supporting Extension
Momentum indicators and trend analysis reinforce the idea that this pair is not done rising. Indicators such as RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) remain supportive of further gains.
– RSI is holding above 60 on the daily chart, indicating bullish control
– MACD lines remain above the signal line, with increasing histogram strength
– Price action remains sustained above the 20-period and 50-period EMAs on daily charts
These elements collectively suggest buyers continue to support the market at higher levels, signaling further upside potential.
Fibonacci Projections and Key Resistance
A variety of Fibonacci tools and resistance level projections validate the 1.1910 target as plausible before a major correction ensues.
– Measured move target for wave 5 aligns near 1.1910, based on extension levels from waves 1 through 3
– 161.8 percent Fibonacci extension of wave 1 from the bottom of wave 4 supports the 1.1910 projection
– Minor resistance at 1.1860 may present a temporary challenge, but the bullish market structure remains intact unless the price falls below 1.1625, which would challenge the current wave count
Fundamental Backdrop Compliments Technical View
Although Elliott Wave analysis focuses on price structure rather than fundamentals, the macroeconomic context also supports a stronger euro. Several themes contribute to positive sentiment toward the euro and bearish pressure on the U.S. dollar.
– Expectations that the European Central Bank (ECB) will maintain its tightening stance longer than the Federal Reserve
– Signs of softening inflation in the United States, which could lead the Fed to pause rate hikes or
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