EUR-USD Primed for Downward Move

NEW YORK (TheStreet) -- In the overnight Asian session, and the start of European trade, stocks were holding higher, while the most widely traded currency pair, euro/dollar, was still consolidating around the 1.5000 psychological level.

A break of this level, and a possible move through the 1.5062 year-to-date high depends on S&P 500 futures momentum staying long. However, a near-term pullback in the S&P 500 is expected.

If, during Tuesday's U.S. session, S&P futures stay below their 1098 top then the euro/dollar pair may move down, first to 1.4870, and then to 1.4820.

From an Elliott Wave perspective, the pair has made a clear five-wave move up from the 1.4625 lows with an extended structure in a blue wave. (Click on the chart below.) This suggests a near-term correction, labeled as a, b, on the chart. The minimum objective of the corrective pullback once this starts is the 38.2% retracement of the previous five-wave move. On our chart this comes in at 1.4820 -- if the top of the five waves has really been established.

TheLFB Charting: EUR/USD One-Hour Elliott Wave View

Traders still need to wait on a confirmation breakout before the euro move happens. Confirmation will appear on a move through 1.4950.

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