Pullback to Fibonacci levels expected after impulsive USD breakouts
The EUR/USD respected the resistance trend line (red) and broke various support levels (dotted
greens) on Friday. The bearish price action fits within the wave XY (brown) correction of wave D
(green). A bullish bounce at the 50% or 61.8% Fibonacci levels of wave D vs B could complete wave D.
A break below these Fibs could change the wave to a bearish trend.
The EUR/USD indeed completed a bullish ABC zigzag (blue) at the resistance (red) as indicated in
Friday’s edition. The subsequent bearish turn was accompanied with strong bearish momentum
which has been marked as a wave A (blue). The Fibonacci levels of wave B vs A should act as
resistance within the wave B (blue) retracement.
The GBP/USD bounced at the 78.6% Fibonacci retracement level of wave 2 vs 1 (pink) and the
resistance top (red) of daily downtrend channel (red). A break above this resistance (red) and the
78.6% Fibonacci retracement level indicates that the wave count would change to a larger ABC
correction within wave 4 (blue). A break of support (green) confirms the bearish mode.
The GBP/USD could be starting a new bearish wave 1-2 (green) but this scenario is invalidated if price
breaks above the 100% Fib.
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