Technical outlook:

A 4H chart view of the EUR/USD pair has been presented here for a better view of waves from top formation at 1.2092 levels earlier. We are still contemplating a fair probability for the pair to produce a leading diagonal wave structure, which should unfold into 5 waves subdividing into 5-3-5-3-5 waves as labelled above. The 5th wave might be complete at 1.1553 levels or should be terminating into another low. A push above 1.1690 levels would confirm that it is complete. It was suggested to turn long in our last discussion and the pair has since gained about 80-100 pips but the rally is still looking to have unfolded into 3 waves and hence may be corrective. Immediate price resistance is seen through 1.1690/1.1700 levels and a clearance of that would be encouraging to bulls. Please also note that the Fibonacci extension (red color) is pointing towards 1.1506 levels at least. Hence, a short-term wave structure might change our trade plan.

Trading plan:

1. Please exit longs and take profits.

2. Aggressive traders would want to go short, with risk around 1.1700 levels, targeting below 1.1550.

3. Conservative traders please remain flat for now and look to buy below 1.1530 levels.

USDX chart setups:

Technical outlook:

The 4H chart setup presented here for the US dollar index is indicating a clear 5 wave impulse probability since the lows at 91.00 levels earlier. We have shown the most likely wave count labeling here that says the index is probably into its v of 5th wave, having terminated wave iv close to 94.40 levels yesterday. One last push is expected towards 95.30/50 levels before reversing lower again. Please note that the entire rally unfolded into 5 waves, which could be labelled as wave A within the three wave corrective rally A-B-C which could terminate higher towards 98.00 and 99.00 levels respectively. The alternate count could be that the entire rally between 91.00 through 95.30/50 levels can be termed as wave (4) of a higher degree and that the pair could drop towards wave (5) lower to test 91.00 levels going forward.

Trading plan:

1. Please book profits on short positions if taken earlier.

2. Aggressive traders would like to long now, with risk below 94.30 levels, targeting 95.30

3. Conservative traders please remain flat and look to sell higher.

Fundamental outlook:

Please watch out for Michigan Sentiment around 10:00 AM EST

Good luck!