The EURUSD was rejected at 1.5000 last week and many traders are calling for a return to the psychological level. We do expect the EURUSD to challenge 1.5000 again…but probably not until 2008. From now until then, there will be plenty of trading opportunities on both the bear and bull sides.
This is our favored longer term structure for the EURUSD. We have wave iii of larger 3 of even larger III complete at 1.4967. Therefore, wave iv (of 3) is unfolding now and should reach at least 1.4588 but possible 1.4353 (these are the 23.6% and 38.2% levels of 1.3360-1.4967). We do expect a rally through 1.5000 and higher once this correction is complete. Wave ii of the same degree took 4 weeks to play out so expect wave iv to last about 4 weeks as well. This week is the second week of the correction so we expect a bottom to form somewhere in the middle of December.
This is a close up of the larger wave iv correction and one of the counts that we are tracking. Wave A of the correction is a 3 wave decline and is complete at 1.4713. Wave B was a sharp rally to 1.4858 and wave C of the correction is underway now. Wave C may be unfolding as an impulse with wave iii of C underway right now. Price is likely to test the 161.8% extension of 1.4858-1.4723/1.4785 at 1.4571 near term (next day or two). This would likely complete the first leg of a larger 3 wave correction from the top.