Markets gapped on Sunday againts the USD after the U.S. President Barack Obama delayed a military strike against Syria by requesting authorization first from an incredulous Congress. From a technical perspective the wave patterns and direction did not change much. We are bullish on USD, it means we expect weaker majors, such as EUR, GBP, CHF, AUD and even JPY.

The reason is the following Inverse Head and Shoulder pattern on USD Index 4-hour chart which already appears complete after push above the neckline at the end of the last week. This break is pointing for a stronger USD, ideally towards 83.00 where we can see and Head and Shoulder projection measured from head to neckline and then from a breakout point.

USD Index 4h Inverse Head and Shoulders pattern

Moves following the completed Head and Shoulder pattern are usually very strong so while market is moving higher we do not expect any larger corrective move, maybe only down to 81.80 where broken neckline (resistance) may turn to a support. This will then be ideal scenario for a downtrend continuation on the EURUSD which completed a five wave decline on Friday around 1.3170 but rally from there is only in three waves, so we assume it’s a zig-zag that will find resistance around 1.3250 zone, at former wave (iv).

EURUSD 1h Elliott Wave Analysis

At the same time we are also observing bearish wave structure on GBPUSD which is showing a five wave decline in wave 1 followed by a three wave rally, that must then stop at 1.5600 resistance area. Traders who are interested to go short on this pair, we recommend to wait on evidences of a completed wave 2. In other words, wait on confirming price action; impulsive bearish reversal back to the lower side of a corrective channel.

GBPUSD 1h Elliott Wave Analysis

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Ew-forecast.com is providing advanced technical analysis for the financial markets (Forex, Gold, Oil & S&P) with method called Elliott Wave Principle. We help traders who are interested in Elliott Wave theory to understand it correctly. We are doing our best to explain our view and bias as simple as possible with educational goal, because knowledge itself is power.

Gregor is based in Slovenia and has been in Forex market since 2003. His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets; from candlestick patterns, MA, technical indicators etc. His specialty however is Elliott Wave Theory which could be very helpful to traders.
He was working for Capital Forex Group and TheLFB.com. His featured articles have been published in: Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu. He mostly focuses on currencies, gold, oil, and some major US indices.

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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