Technical outlook and chart setups:
The EUR/USD pair made a meaningful top on December 8, 2016 which can safely be defined as the wave (2) of the drop from 1.1300 levels earlier. The pair seems to be working out its wave 5, within wave (3) as depicted here, after terminating the 4th wave at 1.0480 levels yesterday. If the above mentioned wave structure remains, we will see EUR/USD dropping lower towards 1.0300 and 1.0200 levels going forward. The pair is expected to finally terminate around parity levels. On the flip side, a push above 1.0500 and subsequently 1.0680 levels would take prices to 1.0900 levels before reversing lower. It is therefore good to remain short around these levels against 1.0680 or take profit on short positions placed yesterday. Immediate resistance is seen at 1.0680 levels while support lies at 1.0350 levels.
Trading recommendations:
Remain short now with stop placed around breakeven levels and target set at 1.0300 and 1.0250. Aggressive traders should take profit on short positions and prepare to go long.
Good luck!
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