EUR/USD Elliott Wave: Correction not over

Executive summary

• Wave 2 corrective decline has begun.
• The decline likely holds below 1.1830.
• Decline to 1.1030 – 1.1170 and possibly lower levels are anticipated.

Current Elliott Wave analysis

It appears EUR/USD is still embedded within a corrective dip from the July 1 high of 1.1830.

This means the current decline is Elliott wave 2 of a larger bullish impulse.

Our Q3 forecast presented on June 30 forecasted a top of wave 1 and decline in wave 2 to carry to 1.11-1.12. We followed up with another forecast on July 16 confirming a top and decline to 1.1170 and possibly lower levels.

The decline, so far, has developed in 3 waves. The August 1 low could be wave ((w)) of 2 or possibly ALL of wave 2. The rebound since August 1 is viewed as wave ((x)) that may find a top below 1.1704. Then, wave ((y)) would begin to lower levels.

I suspect after a brief rally, the decline will continue to dig deeper towards 1.1170.

There is a lot of price support between 1.1030-1.1170. Therefore, anticipate a more meaningful bottom and possibly the end of wave 2 developing in this price zone.

The 6-month rally in EUR/USD appears to have ended this month and a correction is likely underway to 1.1170 and possibly lower levels.

Bottom line

The Elliott wave corrective wave 2 is mid-way through development as a double zigzag. This downward correction may visit 1.1030 – 1.1170 in the coming weeks.

If EUR/USD breaks out to new highs, then we’ll reconsider the wave count for a more bullish structure.