FX.co ★ Trading plan for EURUSD for January 21, 2021

Technical outlook:

EURUSD might have now carved the first corrective wave around 1.2189 highs today. The rally might be followed by a corrective drop towards 1.2100 levels, the second wave of the correction before resuming rally towards 1.2250/60 levels respectively. The single currency is seen to be trading around 1.2175 levels at this point in writing and might be preparing to correct lower towards 1.2100 at least, in the short term. Please note that the corrective phase might extend a bit longer in time and price (1.2250/1.2300 range), before resuming lower towards 1.1600 levels. We can expect the above target to be hit in the next several weeks. Also looking at the larger wave structure, EURUSD rally looks complete from 1.0636 lows in March 2020 through 1.2350 highs on January 06, 2021. If the above holds well, bears might be preparing to produce a meaningful corrective drop towards 1.2100/2200 which is fibonacci 0.618 retracement of the entire rally. Long term potential also remains for a drop below 1.0636 lows. At the moment we focus on a push through 1.1600 support in the next few weeks.

Trading plan:

Remain short, stop @ 1.2450, target @ 1.1600

Good luck!