EURUSD dropped today into a zone that likely creates a strong struggle between bulls and bears.
The Elliott Wave picture is such that there is a bullish view and bearish view which both can be satisfied based on the current pricing. Therefore a meaningful push below 1.0800 or above 1.0950 begins to elevate certain patterns and demote other patterns.
Bearish Wave 3 The bearish wave iii of (iii) is depicted on the chart above. A break below 1.0800 likely accelerates towards the 1.618 extenstion at 1.0480. This is the preferred count as sentiment shifts to the bullish side...using it as a contrarian signal suggests we look for more losses on the pair.
Bullish Equal Wave Pattern Completion The other pattern in sights is that the August 24 high today's low is a large equal wave pattern. This suggest a large bullish burst that potentially retests 1.17. RSI divergence is helping this story develop. As stated above, SSI is shifting towards more buyers and less sellers. These traders have already committed to positions and become a future pool of sellers which would be a head wind to this scenario.
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My opinion: Buy the pair from correction above the level of 1.0890 with the target of 1.15.
Alternative scenario: Breakout and consolidation of the price below the level of 1.0890 will enable the pair to continue decline to 1.08 – 1.07.
Analysis: Presumably, the formation of the correction, as the second wave 2 of the senior level in the shape of the plane qbc, has completed. Locally it is likely that the “bearish” impetus has completed in the wave c of 2. If this assumption is correct, the pair can rise to the level of 1.15 in the one-two wave of the junior level. Critical level for this scenario is 1.0890.