EURUSD might be preparing for a counter trend rally over the next few sessions before reversing lower towards 1.1167 levels. The currency had dropped through 1.1780 levels last week, remained shy by few pips to take out 1.1750 initial support.
EURUSD could either take 1.1750 support before producing the counter trend rally or push higher from current levels. Either way, the currency should remain below 1.2010 levels going forward. Bears are poised to stay in control and carve lower lows and lower highs from here on.
The currency had earlier rallied from 1.0636 through 1.2010 mark sub dividing into 5 waves. The impulse rally should be followed by a corrective drop at similar degree. If the above is correct, EURUSD could be on its way to produce a meaningful corrective drop towards 1.1167 levels, going forward.
EURUSD might have carved a lower degree Wave 1 within the proposed 3 wave corrective structure. It could either drop in a zigzag or flat corrective wave, going forward. Initial support is still around 1.1750 mark and a break lower would be constructive for bears.
Also note that fibonacci 0.618 of the entire rally between 1.0636 through 1.2010 handle is seen through 1.1150/60 mark. Probabilities for a bullish bounce remain high if prices drop towards those levels. It would also complete a classic 5-3 wave structure for the rally to continue further.
Alternately, the recent rally between 1.0636 and 1.2010 could be a part of a complex corrective structure, which has retraced the earlier drop between 1.2555 through 1.0636 respectively. If the above is correct, we could witness a sharp bearish trend reversal, going forward.
Short against 1.2010, target remains open.