Wave Analysis:
The slow growth of EUR/USD which started last week, finished with a significant rally which allowed the pair to fix above 28 figure. The quotes’ upward move started from August 16 low still looks like the inner wave structure of wave с with the extension in the wave 5. If it is so and taking into account the ratio between wave a (or wave 1) and с (or wave 3), we can expect a noticeable price rebound from the reached high or from the level of 1.2940 – 1.2950. At the same time, the fact that there is still a divergence between the direction of the main trend and MACD despite strong growth of the pair, we can expect the situation will turn against the euro in any moment.
Target for correctional upward move in the terms of wave 5 in с or 3:
1.2937 – 61.8% Fibonacci
1.3148 – 76.4% Fibonacci
Targets for down wave (probably 1 or a):
1.2595 – 38.2% Fibonacci
1.2384 – 23.6% Fibonacci
Summary and Trading Recommendation:
Last week the euro rate continued its correctional upward trend. Thus, the quotes rise in the terms of wave 5 in с or 3 is possible towards the levels of 1.2937 and 1.3148 which is equal to 61.8% and 76.4% of Fibonacci. MACD divergence is indicative of the down wave formation. In the terms of this wave, the pair may head to the levels of 1.2595 and 1.2384 which correspond to 38.2% and 23.6% of Fibonacci. However, the ascending channel demonstrates that the upward channel is still valid.