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EUR/USD Forecast 16 Feb 2016

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EUR/USD Forecast 16 Feb 2016
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EURUSD did nothing but moving to the downside

Here we are one day later and the EURUSD pair did nothing but moving to the downside as not it is trading in the 1.1160 area.

Despite the fact that the sentiment on the short term seems to be bearish, we’re interested to buy call options still and this time the investment should be more aggressive when compared with yesterday’s trade.

The triple zigzag the market made to the upside can only come in specific situations: either as the x wave of a running correction or as the fifth wave extension impulsive move that in the end must be completely retraced. It is clear by now that it must be a running correction and therefore either a contracting triangle or another flat pattern should follow.

Draghi spoke yesterday in front of the European Parliament and while the tone was definitely bearish, not all the Euro related pairs moved to the downside. This means it was not a Euro driven event but simple a correction after the huge rally market made in the last weeks.

Now that wave a in red seems to be completed, it is time for wave b to start and if we know something for sure is the fact that this b wave should stretch over the 61.8% retracement when compared with the length of wave a, in order to keep the pressure on the bullish trend we saw in the previous x wave.

How to trade

That being the case, we would like to insist on the long side so we are favoring a call option from the current 1.1150-60 area with end of day expiration date and if we see a meaningful rally into 1.1250 today, then a put option with the same expiration date should be traded.

However, between the two, the call option should be more aggressive as the overall trend is bullish.

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