After my recent post which pointed to a successful bullish wolfe wave being formed, the EURUSD is now all set to ride downhill. In the graph below, i've posted the Stochastic settings as well to confirm the key points of reversal.
What i've also done in this chart is drew a line parallel to the pivots 2 and 4. This is denoted by the blue dashed line. As I mentioned in my previous analysis of EURUSD, drawing a 2 - 4 parallel line shows potential areas where price could continue to rise.
As evident from the chart, price went into the zones between the 1, 3, 5 line and the 2, 4 parallel line that is drawn.
A conservative trade is to wait for EURUSD to drop to 1.2955 and then go short. Potential take profit levels would be 1.289, 1.286. All in all, this Wolfe wave is showing a potential drop to 1.27 region by the 24th of March. However, the drop is quite steep, unless we expect to see a gap in the EURUSD over the weekend. (Think, Cyprus).
However, let's not get carried away. In the chart below, I have plotted a 1, 3, 5 parallel line from pivot point 2. This level will be more ideal. So we are looking at 1.286 where this bearish rally will stop. (Refer to the highlighted area).
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