EURUSD Daily Analysis: Wave (4) Correction Faces Channel Resistance Before Wave (5) Decline 

Introduction 

EUR/USD continues to trade within a well-defined descending channel, maintaining the broader bearish outlook. Recent price action suggests that the market has completed Wave (3) and is currently developing a corrective ABC structure as Wave (4) before the primary downtrend resumes. 

The confluence of the descending channel resistance, Elliott Wave structure, and Fibonacci levels continues to support the expectation of another bearish leg toward the major support zone. 

Wave (4) Correction Approaches Key Resistance 

Following the completion of Wave (3), EUR/USD has begun forming an ABC corrective pattern. 

Price is now approaching the upper boundary of the descending channel, where the projected completion of Wave (C) aligns with a significant resistance area. This technical confluence increases the likelihood that the corrective rally will lose momentum before sellers regain control. 

As long as price remains below the descending channel resistance, the current rebound is viewed as a temporary correction rather than a bullish trend reversal. 

Wave (5) Expected to Extend Lower 

Once Wave (4) is completed, EUR/USD is expected to resume its bearish trend by developing Wave (5). 

The projected downside target aligns with: 

• The lower boundary of the descending channel.  

• The major historical support zone.  

• The Fibonacci 423.6 extension area.  

• The projected completion of the larger corrective structure labelled Wave (C).  

This combination of technical factors strengthens the probability of another bearish extension over the coming trading sessions. 

Awesome Oscillator Suggests Momentum Recovery 

The Awesome Oscillator has started to recover after previously showing bullish convergence, indicating that bearish momentum has weakened during the corrective rebound. 

However, traders should wait for a fresh bearish divergence or momentum reversal near the channel resistance before anticipating the next impulsive decline. Such confirmation would provide stronger evidence that Wave (5) has begun. 

Trading Outlook 

The preferred scenario is for EUR/USD to complete Wave (4) near the upper boundary of the descending channel before resuming the broader downtrend. 

Traders should monitor bearish reversal candlestick patterns such as Bearish Engulfing, Evening Star, or Shooting Star, together with weakening momentum on the Awesome Oscillator. A rejection from the channel resistance would strengthen the bearish outlook. 

A sustained breakout above the descending channel would invalidate the current bearish wave count and indicate that a larger bullish correction may be developing. 

Conclusion 

EUR/USD remains technically bearish while trading inside the descending channel. The current recovery is viewed as Wave (4) within the larger Elliott Wave structure, while the broader trend continues to favour another decline toward the major support zone. Unless buyers successfully break above the channel resistance, the probability remains high for Wave (5) to extend lower in the coming sessions.