Are we going to see a reversal in EURUSD if the price drops further?

Since the beginning of the year, EUR has been steadily increasing in value against the USD and is now testing the heights of the range which has been in place since the start of March 2015. Since February, we have seen multiple waves form during this upward trend as well as much smaller waves form recently over the past month.

Both of these Wolfe Waves have now hit the 5 point and we have seen a sharp reversal back to the 1.36 level. If this reversal continues and the price trades back within the wedge, and closes, we could see a further depreciation back to the recent lows in the current trading range.

Many technical traders will be wary at this level due to the recent weakness in USD. The pattern will only be completed once the prices trades within the wedge so early traders could be punished as the price could break through the top of the range and continue higher over the second part of the year.

Due to the weakness of USD, traders looking to take this trade will want to place the stop loss close above the wedge or above the last wave.

 

Happy trading

Alexander Flood

Technical Analyst

www.fxtradingstrategies.net

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