At the start of last week EUR/USD was trading below 1.0700. The pair had fallen from as high as 1.1496 in just two weeks as coronavirus cases in Western Europe kept climbing disturbingly fast. And while fundamental traders had every reason to expect more weakness, the charts were sending a different message.
The Elliott Wave structure of the pair’s decline from nearly 1.1500 suggested the bears were not as strong as they seemed. Take a look at it on the chart below, sent to subscribers before the market opened on Monday, March 23rd.
EUR/USD 1 Hr Chart - March 23rd 2020
EUR/USD’s hourly chart revealed a five-wave impulse pattern, labeled 1-2-3-4-5. The five sub-waves of wave 3 and wave iii of 3 were also visible. According to the theory, every impulse is followed by a correction in the other direction. Given the big picture outlook, which is also included in our analyses, we expected a little more than that.
So instead of joining the bears below 1.0700, we thought a notable bullish reversal was on the cards. By the end of the week, EUR/USD was trading significantly higher. The updated chart below depicts the bulls’ progress.
EUR/USD 1 Hr Chart
The pair fell to 1.0636 on Monday, when the selling pressure started to disappear. EUR/USD spent the rest of the week recovering. On Friday, March 27th, it reached 1.1148 before closing the session at 1.1142. From bottom to top, the euro added 512 pips while Europe was the epicenter of the biggest health crisis in over a century. It made sense only from an Elliott Wave perspective.