EURUSD Elliott Wave Analysis: Wave 4 Bounce Before Further Downside
Introduction
EURUSD Elliott Wave Forecast: EURUSD remains within an important larger Elliott Wave structure, with the monthly chart suggesting that a triangle may be developing.
Waves A, B and C appear complete, leaving the possibility that wave D is now unfolding as a double three. Within that larger structure, the first leg, wave W, could be approaching completion.
This creates the potential for a corrective recovery before the next larger leg unfolds.
In the analysis below, I break down the monthly, weekly and daily charts to explain the current Elliott Wave count, the potential wave 4 bounce and the key levels I am watching.
Monthly EURUSD Elliott Wave Structure
EURUSD monthly chart showing the larger triangle structure and potential wave D development.
The monthly chart provides the larger framework for the current EURUSD count.
I am interpreting the structure as a triangle, with waves A, B and C appearing complete. Based on this interpretation, wave D may now be developing, with a double-three structure the preferred scenario.
If wave D is unfolding as a double three, its first component, wave W, could be nearing completion.
That would suggest the possibility of a corrective recovery before the next leg of wave D develops.
For now, the focus is on identifying whether the current decline can complete the wave W structure and provide the foundation for a larger corrective move.
Weekly Chart: Wave W Structure
EURUSD weekly chart showing the developing wave C decline and the potential 1.1094 target.
Moving down to the weekly chart gives us a clearer look at the internal structure of wave W.
Wave W appears to be developing as a double-three correction. Within this structure, wave A formed as an impulse, while wave B appears to have completed as a running flat.
The current expectation is for wave C to continue lower.
Within wave C, waves 1 and 2 appear complete, while wave 3 has already reached the 2.618 Fibonacci extension.
From here, I am watching for a wave 4 recovery.
Because wave 2 was a relatively sharp correction, the principle of alternation suggests that wave 4 could develop as a more sideways or complex structure. One possibility is a triangle developing within wave 4.
Wave C Target
The main downside target for wave C is around:
1.1094
This area is significant because of the confluence between the 0.382 Fibonacci retracement and the equal-leg projection of wave A from wave B.
When multiple Fibonacci measurements converge around the same area, it can provide a useful zone to monitor for a potential wave completion.
Once wave W is complete, the larger wave X could then retrace part or all of the wave W decline.
The 0.5–0.764 retracement zone of wave W would therefore become an important area to monitor for a potential wave X recovery.
Daily Chart: Potential Wave 4 Bounce
EURUSD daily chart showing the potential wave 4 recovery zone at 1.1321–1.1384.
The daily chart allows us to examine the potential wave 4 recovery in greater detail.
Since wave 2 developed as a relatively simple sharp correction, alternation suggests that wave 4 may be more complex and sideways in character.
For this reason, I am watching the:
1.1321–1.1384
area as a potential wave 4 recovery zone.
This corresponds approximately with the 0.236–0.382 Fibonacci retracement area.
A triangle could potentially develop within wave 4 around this region, although the exact structure will need to be confirmed as price action unfolds.
The important point is that a recovery into this area would not necessarily signal the end of the larger bearish structure. Instead, it could represent an intermediate correction within wave C.
Once wave 4 is complete, the larger wave C decline remains expected to continue lower.
Key EURUSD Levels
Potential Wave 4 Recovery: 1.1321–1.1384
Primary Wave C Target: 1.1094
Potential Wave X Retracement: 0.5–0.764 of the Wave W decline
The 1.1094 area is particularly important because of the Fibonacci confluence discussed above.
EURUSD Elliott Wave Forecast: What Happens Next?
The current Elliott Wave interpretation suggests that EURUSD may be approaching an important turning point within the larger structure.
The immediate focus is on whether the decline can complete the current wave W structure and allow wave 4 to develop higher.
The 1.1321–1.1384 area is therefore the key near-term zone I am watching.
If wave 4 develops as expected, potentially as a triangle or another sideways corrective structure, the larger wave C decline toward 1.1094 would remain the main scenario.
Following completion of wave W, attention would then shift toward the potential wave X recovery, where the 0.5–0.764 retracement zone could become significant.
As with all Elliott Wave analysis, the count remains subject to revision as new price action develops.
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If you are looking for an Elliott Wave course, you have probably already found the problem. There are dozens of them, they all promise the same things, and most of the free material contradicts itself. Half of what circulates online gets the basic rules wrong.
This post covers what separates a good Elliott Wave course from a bad one, the three things most of them skip, and the one I took myself and now recommend.
What you are actually trying to learn
Elliott Wave is not a prediction system. It is a way of describing the shape of price movement.
The core observation is that markets move in recognisable patterns that repeat at every scale. Trending moves subdivide into five waves. Corrections subdivide into three. Those corrections come in a handful of named forms: zigzags, flats, triangles, and combinations of those joined together. A five-wave advance on a one-minute chart has the same structure as one spanning forty years.
That is the whole framework. Everything else is detail about telling one pattern from another and knowing what each implies about what comes next.
The value is not that it gives you targets. It is that it tells you when you are wrong. A valid count comes with rules attached, and when price breaks one of them the count is dead and you know immediately. That is worth more than a price projection.
Three things most Elliott Wave courses skip
Free videos and cheap courses cover impulses well enough. Here is where they run out.
Degree
Every wave sits inside a larger wave and contains smaller ones. Getting the degree wrong is the most common error in the whole framework, and it propagates: label a structure one level too high and everything nested inside it is wrong too.
Most beginners assign degree from the bottom up, which almost guarantees a rebuild when they zoom out. A course worth paying for teaches you to anchor from the largest visible structure and count down, and gives you the typical duration for each degree so you can sanity-check what you have labelled.
The rules are not guidelines
Wave two cannot retrace beyond the start of wave one. Wave three cannot be the shortest of waves one, three and five. Wave four cannot enter wave one’s price territory, unless the structure is a diagonal, in which case it must.
These are hard constraints. A count that breaks one is not a weak count, it is not a count at all. A surprising amount of published wave analysis quietly ignores this, which is why so much of it is unfalsifiable.
Corrections
Impulses are straightforward. Corrections are where most of your chart time goes and where nearly all the mistakes happen.
The difference between a running flat and an expanded flat changes what you expect next. A double three looks like noise until you can see the three separate structures inside it. Triangles appear in specific positions and nowhere else, and knowing which positions is half the value of spotting one.
Any Elliott Wave course that spends most of its time on impulses is teaching you the easy quarter of the subject.
The Elliott Wave course we recommend
I took Mudassar’s Elliott Wave Principle on Udemy myself, and it is the one I point people to.
It runs to roughly 16 hours across 47 lectures, rated 4.6 by more than 7,000 learners. What makes it worth the time is that it covers all three of the gaps above rather than just the first quarter.
On corrections, it works through regular and expanded flats, running flats, contracting and expanding triangles, barrier and running triangles, single, double and triple zigzags, and combinations. Each one gets a real chart example rather than an idealised diagram, which matters because textbook patterns and market patterns look different.
On validity, it covers the rules and labelling conventions, position of patterns, alternation, extension and truncation, channelling and wave equality, and what he calls the right look, which is the judgement about whether a structure is proportioned correctly. That last one is the hardest thing to teach and the thing that separates a count from a guess.
On application, there is a section combining wave counts with RSI, which matters because momentum is one of the few independent checks on whether a fifth wave is genuinely terminal. And there is a live trading sequence taking a NASDAQ position through analysis, entry, trailing stops and exit, which shows the decision-making between having a count and placing a trade.
The course includes downloadable resources and assignments where you label charts yourself. That part is not optional. You do not learn this by watching.
It will not make you profitable. None of them will, and any course claiming otherwise is selling something other than education.
Wave counting will not tell you what size to trade, how to place a stop relative to your account rather than the chart, or how to stop yourself re-entering a losing idea four times in twenty minutes. Those are separate disciplines and they cost people far more money than bad counts do.
What the framework gives you is a structure for thinking about price, a clear definition of when you are wrong, and market context that is more useful than most alternatives. That is a genuine edge. It is not a complete one, and anyone telling you otherwise is not being straight with you.
Where to go next
Learn the framework first. Then read published analysis with the labels making sense to you instead of washing over you.
If you already know the basics and would rather have the counts than do the work yourself, that is what our membership covers. The free tier gives you summaries and charts as they publish, which is a reasonable way to see whether the approach suits how you think before paying for anything.
Disclosure: Elliott Wave Insight is an affiliate partner. We may earn a commission if you purchase through the link above, at no extra cost to you. Trading involves substantial risk of loss and is not suitable for everyone. Nothing in this post is a recommendation to buy or sell any instrument.
Master the Most Common Corrective Pattern · Rules, Guidelines & Trading Applications
What is a Zigzag?
A zigzag is one of the most common Elliott Wave corrective patterns. It consists of three waves (A-B-C) that move sharply against the larger trend, creating a distinctive “Z” shape on the chart. Zigzags are highly directional reversals with clear structure and reliable Fibonacci targets, making them essential for traders to identify and trade.
Zigzag Structure: A-B-C Breakdown
Wave
Structure
Direction
Characteristic
Wave A
5-wave impulse (or 3-wave)
Against trend
Sharp, decisive move down (or up)
Wave B
3-wave correction (any type)
Against Wave A (bounce)
Retraces 50%–79.6% of Wave A
Wave C
5-wave impulse
Same as Wave A
Sharp move, often extends 1.236–1.618 of Wave A
Key Point: Zigzags are characterized by sharp, impulse-like moves in waves A and C, with a corrective bounce in Wave B.
Official Zigzag Rules
Rule 1: Wave A Structure
✅ Wave A MUST be a 5-wave impulse (or 3-wave in rare cases) ✅ ALWAYS moves OPPOSITE to the preceding trend ✅ Cannot overlap Wave 4 of the preceding impulse
Rule 2: Wave B Retracement
✅ MUST be a 3-wave corrective structure ✅ Retraces 50–79.6% of Wave A ❌ CANNOT retrace more than 100% of Wave A
Rule 3: Wave C Structure
✅ MUST be a 5-wave impulse ✅ Typically reaches 61.8–100% of Wave A ✅ Can extend to 123.6% or 161.8% of Wave A
Rule 4: Zigzag as a Whole
✅ 7-swing structure (5+3+5) ✅ Retraces 50–79.6% of the preceding impulse ✅ Occurs in positions 2, 4, A, or B of larger structures
Fibonacci Relationships in Zigzags
Wave B Retracement of Wave A
Fib Level
Typical Range
Frequency
Notes
50%
Shallow retrace
20%
Less common, indicates strength
61.8%
MOST COMMON
60%
Golden ratio – target this first
76.4%
Deeper retrace
15%
Still valid zigzag
79.6%
Maximum valid
5%
At limit – deeper = not a zigzag
Wave C Extent Compared to Wave A
Fib Ratio
Wave C Size
Frequency
Trading Implication
0.618 of A
Shorter C
15%
Weak zigzag – trend resuming
1.0 of A
EQUAL WAVES
50%
Most balanced – primary target
1.236 of A
Extended C
25%
Aggressive downside – deep correction
1.618 of A
Extreme C
10%
Panic selling/buying – violent moves
Types of Zigzags
1. Standard (Most Common)
Structure: A (5) → B (61.8%) → C (100% of A) Frequency: 50% Trading: Most reliable, easy to trade
2. Extended (Aggressive)
Structure: A (5) → B (shallow) → C (1.236–1.618 of A) Frequency: 25% Trading: More profit, higher risk
3. Truncated (Weak)
Structure: A (5) → B (3) → C (0.618 of A only) Frequency: 15% Trading: Weak – trend resuming quickly
4. Double/Triple (Complex)
Structure: W → X → Y [→ X → Z] Frequency: 10% Trading: Multiple entry points, takes longer
Trading Zigzag Patterns
Setup 1: Anticipate Wave C From Wave B High
After Wave B completes, set sell orders at 100% or 123.6% of Wave A extension from Wave B start.
Wave B retrace
61.8% of A
Entry
At Wave B high, anticipating C wave down
Target C
100% or 123.6% of Wave A extent
Risk
Above Wave B high (invalidation)
Setup 2: Trade the Wave C Breakout
After Wave C completes, trade the trend resumption above Wave A high.
Confirmation
Close above Wave A high = zigzag complete
Entry
BUY break above Wave A high + pullback
Target
Wave 1 of new impulse
Stop
Below Wave C low
Setup 3: Wave B Bounce Trade
Trade the bounce from Wave A low up to the 61.8% retracement.
Entry
At Wave A low (start of Wave B)
Target
61.8% of Wave A (Wave B expected high)
Stop
Below Wave A low
Duration
Quick 1–3 day trade
Zigzag Identification Checklist
Does Wave A have 5-wave subdivision?
Is Wave A moving AGAINST the larger trend?
Does Wave B retrace 50–79.6% of Wave A? (61.8% most common)
Is Wave B a 3-wave structure (ABC)?
Does Wave C have 5-wave impulse structure?
Is Wave C moving in the same direction as Wave A?
Does Wave C reach 61.8–161.8% of Wave A (typically 100%)?
Does the whole zigzag retrace 50–79.6% of the prior impulse?
After completion, does price break above Wave A high?
No overlap violations between waves
Common Zigzag Mistakes to Avoid
❌ Mistake 1: Calling a Wave B retrace >79.6% a zigzag. ✓ Fix: If B retraces >79.6%, it’s likely a flat or other corrective structure.
❌ Mistake 2: Forcing a 3-wave pattern into a zigzag. ✓ Fix: Wave A MUST have 5 waves. 3-wave A = NOT a zigzag.
❌ Mistake 3: Entering Wave C before Wave B is confirmed. ✓ Fix: Wait for Wave B to hit the Fib level before shorting.
❌ Mistake 4: Using Wave A as the only Wave C target. ✓ Fix: Wave C often extends to 1.236–1.618× Wave A.
❌ Mistake 5: Dismissing a pattern because Wave B looks “too big.” ✓ Fix: Wave B can retrace 50–79.6% – trust the math, not the eye.
Real Example: XAUUSD Zigzag
Gold completes Wave 5 of impulse at 4,800, then enters Wave 2 correction.
Wave
Structure
Price Level
Fib Notes
Wave A Down
5-wave impulse
4,800 → 4,500 (300 pips)
Sharp down
Wave B Up
3-wave bounce
4,500 → 4,685 (185 pips)
61.8% of 300p = 185p ✓
Wave C Down
5-wave impulse
4,685 → 4,415 (270 pips)
90% of Wave A ✓
Trade Plan
1. SHORT at 4,685 (Wave B high) 2. Target: 4,415 (100% of Wave A from 4,685) 3. Stop: 4,750 (above Wave B high) 4. R/R: 270 pips / 65 pips = 4:1 ✓
W-X-Y Correction Structure
Wave Component
Wave Structure
Trading Implication
Wave W
5-wave corrective pattern (down)
Initial correction – establishes support
Wave X
3-wave countertrend (up)
Connecting bounce – more correction ahead
Wave Y
5-wave or complex (down)
Final target – deeper than Wave W alone
⚠️ Why W-X-Y Matters: Traders expecting a simple A-B-C zigzag get stopped out when Wave X completes and Wave Y begins. Use 0.618–0.764 Fib extension levels to anticipate Wave Y completion.
Quick Reference: Zigzag Essentials
Structure: A (5 waves) → B (3 waves, 61.8% retrace) → C (5 waves, 100% of A)
Best Fib Levels: Wave B = 61.8% of A | Wave C = 100–123.6% of A
Master sideways Elliott Wave flat corrections with Wave A, B, C structure. Learn Fibonacci extensions (1.272–1.618), wave B retracement rules (90–110%), and three flat correction types for professional trading analysis.
? XAUUSD INTRADAY ANALYSIS
January 6, 2026 | 4H Timeframe
? Session & Context
Instrument: XAUUSD (Gold)
Timeframe: 4H
Date/Session: January 6, 2026 | Asia/London
Trend Context: Bullish (Wave C – expanding flat in larger correction)
? Current Structure
Wave Label: Wave C – Contracting Wedge Formation
Intraday Bias: SELL 80%
XAUUSD forming tightening wedge on 4H. Upper resistance sloping DOWN, lower support sloping UP.
Price at 4,460 squeezed between 4,500 and 4,280. Compression signals imminent breakout within
3–5 candles. Macro Wave C bearish structure = 80% downside probability.
✓ Momentum: RSI at 52.57 (neutral) – volume spike expected
✓ Elliott Wave: Wave C (expanding flat) final leg active
⚙️ Execution Notes
Trigger: Clear close below 4,400 on 4H candle + volume spike
Management: Scale SHORT at 4,440, add on close below 4,400. Trail stop to 4,420 after 4,380. Take profit: 50% at 4,304, 50% at 4,280.
⚠️ RISK DISCLAIMER: This analysis is educational. Trading involves substantial risk. Not financial advice. Manage risk responsibly.
On the 15‑minute chart, GOLD (XAUUSD) continues to grind higher within the current impulse, with price now working through wave (5) of this sequence. Wave (4) has reacted cleanly from support, holding above the prior wave (1) high at 4419.837, which keeps the impulsive structure in GOLD (XAUUSD) intact and validates the immediate bullish bias.
Using the length of wave (1) as a guide, the main intraday targets for wave (5) in GOLD (XAUUSD) come in at the 1.000 and 1.236 extensions, sitting roughly in the 4,497–4,515 zone, while an extended move could stretch toward the 1.618 level near 4,539. As long as price stays above the wave (4) low and the rising trendline on GOLD (XAUUSD), dips on lower time frames are treated as opportunities to join wave (5), with caution warranted as those Fibonacci objectives are approached where profit‑taking and a larger corrective pullback are likely.
This GOLD (XAUUSD) analysis – Elliott Wave update looks at the developing corrective structure in wave b within the broader market context, using the 4‑hour chart to map the triangle and key support zones.
Current intraday structure
On the 4‑hour chart, GOLD (XAUUSD) shows wave ((C)) of b potentially taking the form of an expanding triangle in the orange degree, with price stretching slightly beyond prior swing extremes while still respecting the overall converging channel and Fibonacci projections. Within this Elliott Wave interpretation, wave ((C)) looks close to completion, with the latest push higher likely finishing the final sub‑wave of the pattern.
As an alternate GOLD (XAUUSD) analysis – Elliott Wave view, wave b can be counted as a W–X–Y double three in red, with the latest upswing forming the terminal leg of wave Y. This alternate remains valid while price holds below the upper resistance band and the internal subdivisions retain a corrective character rather than a clean 5‑wave impulse.
Key levels and next area of interest
Under the preferred triangle scenario for GOLD (XAUUSD), the next downside objective is the 0.382–0.764 retracement zone of wave ((C)), highlighted as the potential wave ((D)) demand area on the chart. This box aligns with prior structure support and the lower boundary of the developing sliding correction, making it the primary “buy‑the‑dip” region if price can correct into it in a controlled three‑wave decline.
Invalidation for this GOLD (XAUUSD) analysis – Elliott Wave roadmap sits beneath the lower edge of the wave ((D)) zone; a decisive break there would suggest wave b has already topped in a more complex fashion, shifting focus back to deeper corrective possibilities before the higher‑degree advance resumes.
Wave iv flat correction above support
GBPUSD Elliott Wave analysis currently shows price consolidating in a wave iv flat correction within a broader bullish structure on the 4H chart. The pair is holding above the 0.382 Fib support at 1.32855, which aligns with the base channel support and keeps the medium‑term uptrend intact. As long as this zone continues to hold, the working assumption is that wave iv is still unfolding rather than a full trend reversal
GBPUSD Elliott Wave Analysis – Wave iv Flat on 4H
Intraday structure and bullish trigger
Intraday, the bias is neutral‑to‑bullish while wave iv completes, with attention on the internal structure of wave (c) of ((b)). The plan is to wait for internal wave (4) of ((c)) to form(around1.33430) and then look for a break back above that high as the trigger for renewed upside momentum. If that confirmation arrives, the next objective is a wave v advance targeting the 0.618–0.764 Fib zone between 1.35418 and 1.36354, where prior resistance and Fibonacci confluence may cap the move.
When the Elliott Wave count fails
If price were to lose the 1.32855 support and break cleanly below the base channel, it would warn that wave iv is evolving into a deeper correction or that the larger bullish count needs to be reassessed. Until then, GBPUSD Elliott Wave analysis continues to favour buying dips into support rather than chasing extended strength at the top of the range.
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This DXY Elliott Wave analysis examines a 4H wave (2) zigzag correction within a larger bullish wave (1) impulse, highlighting the support cluster around prior wave‑1 lows and the 0.618 retracement.
Wave structure and context
On the 4H chart, this DXY Elliott Wave analysis labels the advance into the recent high as wave (1) and the current decline as wave (2) in a zigzag within a well‑defined corrective channel.
Higher timeframe count labels the advance into the recent high as wave (1) impulse, with the current decline mapped as wave (2) correction unfolding as a clear A‑B‑C zigzag within a well‑defined red corrective channel.
Wave C is probing into the green support box between the 0.618 retrace near 97.918 and prior wave‑1 support around 97.808, aligning price, structure and fib symmetry for a potential completion of wave (2).
Key levels and trade plan
Support is anchored at 97.808 (wave‑1 low), with resistance at 98.764 (wave A) and upside fib targets projected toward the 0.5–0.618 extension window at 122.102–132.161 for the prospective wave (3) advance.
The trading plan favours a long bias from 98.415, with protective risk just below 97.698 under wave‑1 support and an initial take‑profit focus at 121.258, assuming the corrective channel eventually breaks to the upside.
Confluence and validation
Confluence comes from the 0.618 fib tap at 97.918, price still respecting the corrective channel boundaries, and 4H RSI divergence, all consistent with a maturing corrective low rather than fresh impulsive selling.
This DXY Elliott Wave analysis roadmap ties in with your broader cross‑market view in the existing DXY, gold and GBPJPY analysis, with the invalidation zone below 97.698 acting as the line in the sand that would negate the immediate long scenario and force a reassessment of the wave count.
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Gold Elliott Wave Analysis on the 15-minute chart shows wave 4 consolidation completing. Expecting pullback to key Fibonacci levels before continuation of the bearish move.
This EURUSD Elliott Wave analysis shows wave (D) of the correction is complete. We’re now expecting wave (E) to develop as the final leg of this corrective structure.
Key Level: A break below 1.17205 will confirm the EURUSD Elliott Wave analysis and signal wave (E) is underway.
Watching for completion of wave (E) before looking for long entries. ?
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