EURUSD – A complex wave 4 correction is in force
The pair has been trapped in a multiyear triangle consolidation between 1.4950 and 1.1870. We prefer to view the setback from 1.4945 (May’11 high) as wave (D) of the large triangle which is likely to retest the key swing low at 1.1870 on multi-month basis (even a push lower is possible). The 1.2695/1.2750 resistance is critical level for the bearish view ahead of 1.3000. A reversal above however would refocus on 1.3485.
The wave 4 corrective bounce from 1.2040 appears to be unfolding as a complex pattern (either triangle or double zigzag). Staying below the swing high at 1.2440 would favour a triangle range consolidation between 1.2130 and 1.2440. A move above 1.2440 would extend the recovery toward 1.2500 /1.2550 (38.2% retracement level) resistance which may prove tough. A reversal below 1.2135 would refocus on 1.2040 initially ahead of the 1.1900/1.1870 support. Nevertheless, a break above 1.2550 would expose the tough 1.2690/1.2750.
