Even though I have not posted an update of the short term EWP since November 5 I never lost sight of this pair, the problem is that I have not been able to decode into a coherent pattern the sideways move that is in force since the September 17 high.
Regarding the long-term scenario I maintain the idea discussed on September 9 in the Forex Market Long Term Analysis thread.
It is obvious though, that price is unfolding a corrective move, (A consolidation of the up leg off the July lows) which is most likely a continuation pattern.
In my opinion price, once the “unknown” EWP is complete will kick off a new up leg, which could match the length of the July – September up leg.
In other words I expect a Zig Zag higher = (ABC)
It is obvious that there are similarities in the move off this summer low between the EUR and SPX:
Therefore I expect that going forward the positive correlation will be maintained. Hence if the EUR breaks above the September 17 top, SPX should follow this pair higher.
Recall that in the case of SPX so far even though breadth is suggesting a break out a likely scenario the price internal structure is suggesting a potential Flat.
Regarding the EUR the pattern from the September 17 high is clearly corrective; therefore it must be involved in unfolding one of the following patterns:
The issue is that the up leg off the November 13 low is not impulsive hence EW wise the odds that price has established the bottom of the wave (B) are slim.
Since the pattern is not clear to me, at least there is a clear pivot support at 1.2878 that is the line in the sand. As long as price remains above it bulls will attempt to achieve a break out while below it the corrective pattern will extend maybe with a Triangle (Red contracting trend lines) or a Flat (Black parallel trend lines)
So bears don´t have much to gain while bulls have in their hands a continuation pattern.
Again going back to the SPX scenarios that I have been discussing, obviously if the correction from the September 14 high is not complete yet, in which case SPX is involved in a potential Flat corrective pattern the EUR must not break to the upside.
If it does break above the September 17 high then, given that the up leg off the November 13 low is not impulsive, I can only guess that price is unfolding a Leading Diagonal (I) of (C).