EURUSD is moving in a broader downtrend on the H4 timeframe and is currently forming a Contracting Triangle, a corrective structure that typically follows a strong impulsive drop.
According to the analysis, the impulsive waves 1, 2, and 3 have been completed. The currently active wave is Wave 4, moving in an A-B-C-D-E triangle sequence following the internal structure of (b), 1, 2, (i)(ii)(iii)(iv)(v) of 3. Currently, the D and E legs of this triangle are active.
Critical Support : 1.14664 - 1.14110 (Initial major support zones the price will test upon a downward breakdown.)
Critical Resistance : 1.16055 - 1.16500 (The upper band of the triangle and the expected rejection area for bullish attempts.)
Target Zone : 1.13500 - 1.13000 (The potential completion and take-profit zones for Wave 5.)
Invalidation : 1.17500 (The level where Wave 4 enters the territory of Wave 1, completely invalidating the current count.)
Primary Scenario : The price is expected to complete the D and E legs within the contracting triangle. Following the completion of the E leg, a breakdown of the lower triangle band will initiate Wave 5 in the direction of the main trend (downward). Note that triangle structures carry high volatility and "fake-out" risks until a confirmed breakout occurs.
Alternative Scenario : If the price breaks the upper band of the triangle with significant volume and breaches the 1.1750 invalidation point, the bearish scenario will be canceled. In this case, the correction might evolve into a more complex WXY structure.
Why is this Analysis Critical?
Looking at the previous waves, we observe that Wave 3 deepened perfectly in line with the Fibonacci extension levels of Wave 1. The upcoming 5th wave decline, expected to start after the triangle's E wave, is projected to reach the 1.1350 levels according to Fibonacci ratios.
Unlike classical technical analysis that merely draws static support and resistance lines, Elliott Wave Theory provides context, showing exactly "where" the market is in its cycle. The current Wave 4 triangle tells us the market is just resting and the broader downtrend is not over yet.
Which Elliott Wave is EURUSD in right now?
EURUSD is currently in a Wave 4 correction on the H4 chart, specifically completing the final stages (D and E legs) of a contracting triangle.
What is the downward target for EURUSD?
The potential downside targets for Wave 5, which is expected to begin after Wave 4 completes, are 1.13500 and 1.13000.
At what price level is the EURUSD Elliott scenario invalidated?
The bearish scenario becomes invalidated if the price reaches 1.17500, as Wave 4 would overlap with the price territory of Wave 1.
The contracting triangle structure observed on the EURUSD 4-hour timeframe points to final preparations for a new downward wave (Wave 5). Traders should monitor volume and the direction of the breakout closely. This content is for educational purposes only. It is not investment advice. Please consult a licensed advisor for your financial decisions.