Eur/Usd fell sharply during the past few weeks from 1.4279 region, where an impulse wave (NYSE:C) completed a three wave bounce from 1.1875 region. A decline from the highs is very powerfully, and signals for more weakness ahead since the prices also fell below 1.3330 region, which confirms a bearish scenario and invalidates any bullish interpretations.
With this being said, I am looking for an impulse structure from the top, with wave 3) underway, since recent corrective move within a downtrend completed at 1.3785 labelled as a red wave 2). The minimum requirements for wave 3) target are levels shown around 1.2950, as wave three is very rarely shorter than wave one, but the typical target is around 1.2450-1.2500; 161.8% wave 1) extension, measured from a wave 2) high.
So, now we know that we should focus on higher US dollar in the coming weeks, especially as daily candle also fell below the blue support line, and suggests that wave three of three is in progress as shown on our 30min chart below.
My primary count remains directly bearish while 1.3386 resistance must hold. Even if this level is broken, I will continue to look on the downside after a corrective wave 2 finishes somewhere below critical 1.3785 wave 2) top from a daily chart.
The only thing that concerns me about Long US dollar expectation is the S&P500, which shows a corrective personality, probably in a fourth wave. However, the correlation between Eur/Usd and S&P Futures was very weak in this past week, so maybe we should not pay attention so much to the S&P structure after-all. But what I can see from that overlay chart shown below is that if S&P futures fall below 1170-75 support, the US dollar gains should accelerate against the Euro.
S&P 500 1h chart:
S&P Futures/EurUsd Overlay chart: