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The decline from 1.3170 down to 1.2660 is a three wave move. Three wave patterns are corrective waves, part of a larger trend which is clearly bullish from 1.2030.

Therefore we believe that EURUSD will continue higher, ideally into wave (C) within a five wave rally after a 1.3170 break which we think might  happen in the next few weeks while 1.2660 holds.

EUR/USD Elliott Wave Analysis December 10 14 2012
EUR/USD Elliott Wave Analysis – Click image to enlarge

If we are correct, then reversal seen last week from above 1.31 is only wave 2) pull-back.

If for any reason 1.2660 would be breached, then wave (B) would become even more complex than firstly thought, but still as a part of an uptrend.