Elliott Wave Analysis of EUR/USD – August 18th, 2025
Original author: EWM Interactive
The EUR/USD currency pair has shown notable movements in recent weeks, and an Elliott Wave analysis provides a clearer picture of where the pair might be headed next. According to EWM Interactive’s August 18th, 2025 analysis, the structure suggests a bearish outlook might still be in place despite some minor bullish retracements. This article will revisit the analysis with extended context and detailed elaboration to better understand the implications for traders and investors alike.
Overview of Elliott Wave Theory
Before diving into the technical patterns observed on EUR/USD, it’s essential to understand the Elliott Wave Theory, which is the backbone of this analysis. Developed by Ralph Nelson Elliott in the 1930s, this method is based on the idea that financial markets move in recognizable wave patterns influenced by investor psychology. These patterns are fractal in nature, meaning they repeat across different timeframes and scales.
There are two types of waves in the Elliott Wave Principle:
– Impulse Waves: These move in the direction of the main trend and are composed of five sub-waves.
– Corrective Waves: These are counter to the trend and consist of three sub-waves.
A full cycle includes 5-wave impulses followed by 3-wave corrections, effectively forming an 8-wave cycle.
Primary Elliott Wave Perspective on EUR/USD
EWM Interactive’s analysis identifies a completed five-wave impulse structure from 1.1240 to 1.0450, marking the beginning of a bearish cycle. This formation reflects the first leg of a larger corrective sequence, suggesting more downside potential over the medium term.
Key observations:
– The first wave down (Wave 1) from 1.1240 to 1.0915 marked initial bearish pressure.
– A corrective Wave 2 retraced nearly 50 percent of the decline, retracing back to 1.1070.
– Wave 3 accelerated to the downside, confirming the strength of the bear trend by reaching 1.0450.
– Wave 4 retraced a portion of Wave 3, climbing back to 1.0650 but failing to overlap with Wave 1 territory, as per Elliott Wave guidelines.
– Wave 5 drove prices lower once more, potentially completing the structure at around 1.0250.
Interpretation of the Current Correction
After this five-wave decline, the market began a corrective counter-trend rally. According to the Elliott Wave model, this recovery should unfold in three waves labeled A-B-C. The latest data shows that Wave A from 1.0250 to 1.0550 has likely been completed, suggesting that a short-term rebound phase is underway.
Breakdown of the corrective sequence:
– Wave A: Strong upward rebound from 1.0250 to 1.0550, reflecting short-covering and profit-taking activity.
– Wave B: A potential pullback or sideways correction could bring prices down to around 1.0400 or 1.0350.
– Wave C: Final leg higher could take the pair as far as 1.0600, assuming symmetry with Wave A.
The pattern implies the current move up is merely a counter-trend retracement rather than the start of a new bullish phase. In Elliott Wave parlance, the larger downtrend remains intact as long as the price does not surpass the 1.0650 mark, which served as the top of Wave 4.
Fibonacci and Technical Lens
Fibonacci retracements and projections are often used alongside Elliott Wave counts to identify probable support and resistance levels. These mathematical relationships help clarify potential turning points during corrective or impulsive phases.
Important technical markers include:
– 38.2 percent retracement of the entire bearish structure rests near 1.0580.
– A 50 percent retracement aligns around the 1.0650 resistance level.
– If Wave C equals
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