The EUR/USD completed its bullish bounce yesterday at support trend line (and yesterday’s 50% Fib of wave B) and price is now challenging a key resistance trend line (red). A bullish breakout could indicate the end of wave B and the start of wave C whereas a bearish bounce could mean that price is building an expanded ABC correction within wave B (blue).
A break above the resistance trend line is still needed to confirm the bullish breakout within wave C (blue), whereas bearish price action could indicate a deeper wave B. A bullish breakout aims at the previous resistance zone (red box) whereas the invalidation level of the ABC (blue) is the bottom of wave X (pink).
The EUR/USD could have completed a bearish ABC (orange) pattern within wave 2 (green) when considering the strong bullish bounce at the support trend line (blue). A bullish breakout however is critical to confirm the potential bullish and impulsive wave 3 (green). A bearish bounce could change the wave pattern and perspective and make it more likely that price is still in a wave B (blue).