Bottom line:  EURUSD structure changes to bearish against 1.1500 levels going forward. The drop below 1.0778 levels indicates potential for further drop.

Technical Analysis:

EURUSD bears are in control after reversing from 1.1500 levels recently as they remain poised to drop further, going forward. Bottom line for bullish reversal is that 1.1500 resistance should break.
Unless that happens, the rallies should be corrective and might be seen as opportunities to go short. The entire wave structure might be changing for the short to medium term after breaking below 1.0778. Looking at a larger degree, EURUSD might be into its last leg of the corrective drop that began from 1.6 levels in 2008/09. Going further, the drop from 1.2555 through 1.0880 could be labelled as A-B-C (5-3-5), further labelled as (W) o the chart. Wave (X) might have unfolded into an expanded flat A-B-C (3-3-5) that terminated at 1.1500 mark. The drop since 1.1500 levels could be Wave (Y) under progress, and looking to terminate below 1.0340 to complete the corrective structure. Since the corrective drop from 1.6 levels, EURUSD was expected to drop towards parity and a drop below 1.0340 now might complete the pattern. Alternately, if bulls manage to hold above 1.0340 levels and break above the 1.1500 resistance, EURO would turn bullish again. Please note that resistance begins around the 1.0975 levels, considering the drop between 1.1500 through 1.0636. In the immediate short term EURUSD might rally towards 1.0975 levels and terminate Wave B within Wave (Y). Most traders might be initiating fresh short positions between 1.0975 and 1.1000 with a potential target below 1.0340 levels going forward. A safe trading strategy might be to sell on rallies, until prices stay below the 1.1500 resistance. The 1.0778 might act as a support turned resistance zone.

Prepared by

Harsh Japee, Technical Analyst.

EURUSD Chart

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