Capital Properties FX
Capital Properties FX

EURUSD – Possible Zigzag on the Hourly Chart

As the name suggests possible zigzag forms for the second correction on the EURUSD pair. The analysis shows you what to consider when dealing with a possible zigzag.

Possible Zigzag

What is a Zigzag?

A zigzag is a corrective pattern. And, the key when looking at such a pattern is to interpret the b-wave’s retracement: if the b-wave retraces more than 61.8% out of wave a, then the pattern is a flat, with a structure of 3-3-5.

On the other hand, if the b-wave retraces less than 61.8%, then the pattern is a zigzag, with a 5-3-5 structure.

In our case here, we have a nice contracting triangle for the b-wave. Because the retracement level is below the 61.8% area, the rule stands true. Moreover, looking at the five-three-five structure and considering the two impulses for wave c and wave a, we notice almost equality for the two waves. Both in time and price! This is just another clue this move is corrective, not impulsive.

What Next for the EURUSD Pair?

From this moment basically, we expect the previous highs to give way, as such a move confirms the possible zigzag pattern.