There are many fundamental and political cross current at play and could complicate any attempt to analyse this pair along with most USD Pairs. However, From perspective we appear to have completed or are close to completing the 5 wave move from last high in May 2014.
If this is correct then we could expect a reversal or at least the retracement of the decline by 38.2% (a common fib ratio) could be the minimum expectation.
Technicals to note are:
1. Overwhelming sentiments for EURUSD and report suggesting an increasing short interest.
2. At a Nov 2005 low that could act as potential support.
3. At a potential support line of which also coincide with Stretched as it did with Nov 2008 low, June 2010 low, Aug 2012 low.
4. trend suggest potential low in Late Jan - Feb time frame. Potential time symmetry (See chart below) suggesting mid to late Jan for potential low to form.
Therefore a retracement is what could be expected and move to the downside now would be limited and get very risky trade.
Future longer term prospect for EURUSD and other USD Pairs depends on if the 5 wave decline since May 2014 high become a larger wave 1 of a much longer cycle or completes the cycle. There are no way of knowing that right now.
Therefore once the low is formed the nature of bounce would give further clues for longer term prospects. Will be observing that with keen interest.
As always, please do you own analysis for your requirement, select to follow me and the chart for notification of future updates and indicate with Thumb-Up, if you like the analysis. Leave constructive comments so we can all learn from it.
Thank you for your taking the time to check my analysis.
Euro (EUR), 57.6% weight
Japanese yen (JPY) 13.6% weight
Pound sterling (GBP), 11.9% weight
Canadian dollar (CAD), 9.1% weight
Swedish krona (SEK), 4.2% weight
Swiss franc (CHF) 3.6% weight
I am only referring 90% from the chart in context.
Please enlighten if i am wrong, still learning :-)
Now, the interesting thing about the EURUSD's trend since May is that it unfolded in five waves into the recent low. The fifth wave has kept extending, going past our idealized price targets. But one day (soon) it will end, and EURUSD will zoom upward.
You can only wonder what fundamental reason analysts will ascribe to the coming rally.
However, as you can see based on my wave counts and projection of internal Fib relationship suggest that now we could look for possible low around 1.14-1.135. If that does not hold then next possible low could be in thee region of 1.2. This is clearly shown by minor wave counts. There is nothing to suggest right now that these waves could extend even further but will review if price action requires it.
When market is in free fall the moves can become very exaggerated. But one can only go by what normally holds with allowances that extreme moves might go further than anticipated.
However, you must do your own analysis and disregard this if you believe that EURUSD is in complete free fall and has not chance of even making any retracement as many have already concluded that EURUSD could now fall to parity at best or even lower to 0.8 . Should this materialise then I will hold up my hand and admit I got it all wrong. Till then I will maintain the stand noted above and in main published chart.
Risk of overstaying with mature trend and be caught on the wrong side on reversal increase with lower prices in this case.
So Draghi could be digging the grave for me on 22nd.
The retracement target of 1.18 could sound crazy.. wish me luck