The EUR/USD probably reversed on September 1st. A sustained break below 1.166 confirms that the trend turned bearish.
The rally from the March bottom is probably an A-B-C pattern. It is divided by a triangle B-wave, which resolved to a sharp rally along with risky assets. The EUR/USD reached the pale grey trend support that guided price action since the financial crisis in 2007-2009. An immediate breakout from here is unlikely as the rally unfolds on extremely positive sentiment and positioning.
The base case is a reversal after the latest top recorded diverging momentum. Most likely, a bearish impulse unfolded from September 1st. Some form of downside followthrough is likely, and 1.166 can guide the subsequent path. A sustained drop below that S/R implies that the black count is correct and a B-wave triangle of primary degree forms. The red scenario takes account of the possibility that the swing from March 2020 morphs into a bullish impulse. A final fifth wave unfolds in that scenario after the 1.166 support holds.
Nonetheless, both scenarios have the same implication. A deeper correction is going to resolve sooner or later to the upside. The US Dollar is short-term bullish and mid-term bearish.
The rally from the March bottom is probably an A-B-C pattern. It is divided by a triangle B-wave, which resolved to a sharp rally along with risky assets. The EUR/USD reached the pale grey trend support that guided price action since the financial crisis in 2007-2009. An immediate breakout from here is unlikely as the rally unfolds on extremely positive sentiment and positioning.
The base case is a reversal after the latest top recorded diverging momentum. Most likely, a bearish impulse unfolded from September 1st. Some form of downside followthrough is likely, and 1.166 can guide the subsequent path. A sustained drop below that S/R implies that the black count is correct and a B-wave triangle of primary degree forms. The red scenario takes account of the possibility that the swing from March 2020 morphs into a bullish impulse. A final fifth wave unfolds in that scenario after the 1.166 support holds.
Nonetheless, both scenarios have the same implication. A deeper correction is going to resolve sooner or later to the upside. The US Dollar is short-term bullish and mid-term bearish.