The outlook for the eur-usd exchange rate for the next few months reflects one of the main characteristics of the forex market, analyzed according to Elliott’s wave theory. I refer in particular to the presence of structural movements characterized by the sequence of three waves instead of eight waves provided by the complete cycle of which five impulsive and three corrective.
In other words, for those unfamiliar with this type of analysis of financial objects, we can state that there are three directional movements, two of which in the same direction bullish or bearish and one intermediate in the opposite direction to the previous one.
To explain better I will examine the trend of the euro-usd exchange of the last eighteen years with the count that I propose in the following chart
EUR-USD – Elliott Wave Forecast – LONG/TERM SCENARIO – Monthly time frame – Update July 2, 2018
As you can see, the first bullish cycle before and after the introduction of the EURO ends in July 2008 with a three-wave movement. From July 2008 to January 2017, we close the other movement against the first or alternatively as shown in the chart the first part of this. Since we are talking about movements that must be fractalized on inferior time frame, it is better to analyze the daily and intraday charts.
EUR-USD – Elliott Wave Forecast – SHORT/TERM SCENARIO – FRACTALIZATION – Daily time frame – Update July 2, 2018
Immediately we expect an intermediate bullish reaction that we will classify as wave b of B major wave, destined to characterize the second part of the current year in a bullish direction and to prepare than wave c of B major bearish that most likely will characterize the end of current year and the beginning of next 2019.
For the principle of wave fractalization we come to the operation scheduled for the next sessions. This is bullish based on the fractal analysis performed on the four-hour time frame. We took the intraday because, for the calculation of the setup, the concept of daily chart in the forex market is misleading given the different openings and closures adjustable around the world.
Eur-USD – Pattern Prediction for the next 20 trading days – Update June 29, 2018
The daily chart can be analyzed normally for other purposes but it is better to integrate it with the 4-hour chart, especially if we have to make predictions based on Elliott wave theory for operational purposes. Based on the latter, we note that the last impulse closed at 1.1526 on 28 June 2018 and can be classified as the end of the completely bearish expression, which took place on 16 February 2018 from the last relative top of 1.2557.
EUR-USD – Elliott Wave Forecast – SHORT/TERM SCENARIO – FRACTALIZATION – 240 minutes time frame – Update July 3, 2018
From this bottom there is a first bullish impulse on the time frame at 240 minutes (4 hours then) that joins the last bearish impulse closed on 28 June at 1.1526 level which will represent the limit and reference threshold for building bullish projections (overlap).
As long as we are pointing this level of 1.1526 (overlap), the probability of a gradual recovery of the euro against the dollar will be greater, with targets that can be listed at: 1.1795, 1.1872 and 1.1989. The Euro recovery, not only against the dollar but also against all major currencies, should characterize the forex market over the next three months.