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Elliott Wave Analysis of the EUR/USD Currency Pair by Sid from ElliottWavePredictions.com

 EUR/USD  Comments Off on Elliott Wave Analysis of the EUR/USD Currency Pair by Sid from ElliottWavePredictions.com
May 192015
 

Elliott Wave Analysis of the EUR/USD Currency Pair by Sid from ElliottWavePredictions.com.  Click on the charts to enlarge.

There appears to be quite a debate going on these days about whether the Euro is finished going down or not.  In my opinion, a combination of Elliott Wave and Hurst cycle analysis suggests that the March low is, in fact, a major bottom in the Euro.  Here’s why . .

EURUSD weekly 5-19-15

As shown in the weekly chart above, the triangle that started in the EUR/USD currency pair back in October of 2008 lasted over five years, finally ending in May 2014.  Triangles are followed by terminal thrusts.  So far the downward thrust has carved out three waves down.  Many are still expecting a 5th wave, but I don’t think that’s going to happen for several reasons:

  • The initial drop from the July 2008 all-time high through October 2008 was a “three” (in the form of a zigzag).   This is why I’ve labeled the October 2008 low as a primary (burgundy) degree wave W.  If that interpretation is correct, the multi-year triangle that followed was an X-wave triangle, and the downward terminal thrust out of that triangle was a burgundy wave Y.  Y waves are “threes”, not “fives”.
  • Utilizing R. N. Elliott’s triangle measurement technique, the measured target for the end of the thrust from the multi-year triangle in the Euro was 1.04470.  ( I was able to finalize that target back in July 2014, when the Euro broke down out of the blue trend channel).  In March of this year, the Euro started a substantial reversal at just 15 pips shy of that target.  The thrust target has essentially already been reached.
  • Hurst cycle analysis is considering the March low a 4.5-year cycle trough.  This suggests that a multi-year uptrend in the Euro has already commenced.
  • Thrusts from triangles are generally relentless, typically racing within a narrow channel, or in parabolic fashion until abruptly ending.   The 1005 pip bounce since the March 13 low in the Euro simply does not fit well within an expectation for a downside thrust continuation from the May 2014 top.

EURUSD daily 5-19-15

Moving on to the daily chart (above), examination of the internal wave structure within Burgundy wave Y shows the completed black ABC zigzag structure.  Within both black wave A and black C, there was blue 3-5 MACD divergence.  Also, the final capitulation into the March 13 low was a terminal thrust from a blue wave 4 triangle.  Importantly, wave C black was slightly shorter than 1.382 times the length of wave A black, once again suggesting that the entire drop from May 8 2014 through March 13 2015 was an ABC, and not a 123.  (Wave 3’s are typically 1.618 times the length of wave 1’s, or longer).

EURUSD 240m 5-19-15

Finally, upon examination of the 240-minute chart (above) , if a major trend change has occurred, we would expect a 5-wave structure to the upside to support the idea.  So far, we’ve seen a blue wave 1 in the form of a contracting leading diagonal followed a characteristically deep blue wave 2.  Then, wave 3 blue ended within just 8 pips of being 1.618 times the length of wave 1, a very typical relationship of wave 3 to wave 1.  Now, it appears that blue wave 4 is underway, if not already finished.  Wave 4’s most often retrace wave 3’s by a Fibonacci .382 relationship, so a good target for the end of blue wave 4 is 1.11052, which is only 53 pips above blue 4 invalidation at 1.10519.  Wave 4 appears so far to have completed a pink ABC corrective structure to the downside, with wave C only slightly longer than wave A was.  It is also possible that blue wave 4 will carve out a longer lasting triangle, as long as the pair stays above blue 4 invalidation (1.10519).

If the Euro continues lower than blue 4 invalidation, the April low of 1.05203 would then become invalidation, as my alternate count would become the main.  That alternate would expect that a nested bullish 1-2-1-2 is underway starting from the March low.

Sid Norris
http://elliottwavepre.wpengine.com

Elliott Wave Analysis of the EUR/USD Currency Pair by Sid from ElliottWavePredictions.com

 EUR/USD  Comments Off on Elliott Wave Analysis of the EUR/USD Currency Pair by Sid from ElliottWavePredictions.com
Feb 122014
 

EURUSD weekly 2-12-14 new idea

Elliott Wave Analysis of the EUR/USD Currency Pair by Sid from ElliottWavePredictions.com.  Click on the chart twice to enlarge.

The “Teflon Euro” has stayed amazingly resilient for a full year now after the initial calls for the end of a multi-year triangle emerged in February 2013.  The above wave count shows that the Euro may have one more trick up its sleeve before finally succumbing to the likely downward thrust from that triangle.

Some  have given up on the triangle idea altogether, and others are looking for an eventual upward thrust from the over 5-year old triangle.  Of all of the interpretations, I still think that wave E of the triangle is either complete, (ending at the late December 1.3893 high), or, as this chart depicts, has yet to finish, with one more spectacular stop-hunt left in the tank as a diabolical parting gift for all the eager Euro bears.

The best reason for the existence of the wave count shown above is that wave D (black) of the triangle was “complex”.  It was a WXY double zigzag.  According to the blue book (Frost & Prechter), only one leg of a triangle can be “complex”, and if it is, its likely to be a double zigzag. Also, according to the book, the most likely leg of a triangle to be complex is the “D” wave.  The fact that the D wave (as labeled) is “complex” supports the expectation that when this 5+year-long triangle finally does conclude, the resulting large terminal thrust will be to the downside.

Also, since wave D (black) was complex, and only one leg of a triangle is allowed to be complex, wave E must be a standard (blue) ABC zigzag, subdividing 5-3-5.  This has been difficult for me to accept because the blue wave A (within black wave E) looks very much like a “three”, and the pink wave 4 within the blue wave C (underway now?) appears, upon first glance, to have potentially overlapped into the price territory of wave 1 (pink).  So admittedly, the forcing of the labels into the shown positions has been somewhat sickening, but there may be a development underway now that supports this count:  Wave 4 pink may be carving out a triangle.

This would be a very fitting ending scenario for the 5+year-old triangle, as the next fairly large move to occur would be a (pink 5) terminal thrust to the upside, taking out a metric butt-ton of stops. THEN, the much larger thrust to the downside would ensue. Traders would be ripped to shreds in both directions. Ultimately, this is what the “market” lives for: taking out stops . . and as many and as often as possible.

One last bit of supporting technical evidence for the above wave count is that it would allow Burgundy (Primary) wave “B” to retrace Burgundy wave “A” into the very most typical .5 to .618 Fibonacci retracement area (1.4173 – 14609).

I’m not saying this is my main count yet, but the price action in the British Pound, the Euro, the Swiss Franc, and the US$ Index in the past twenty-four hours is certainly suggesting it.  The next few days will be very important.  Any movement below 1.3205, and the pink 4 triangle idea is invalidated.  On the other hand, any movement above 1.3893, and obviously, the 5+year-old triangle isn’t over yet, and if the character of the upward movement is quite aggressive, the count shown here will become my main.

Sid

http://elliottwavepre.wpengine.com

Elliott Wave Analysis of the USD/CHF Currency Pair by Sid from ElliottWavePredictions.com

 EUR/USD, US Dollar Index, USD/CHF  Comments Off on Elliott Wave Analysis of the USD/CHF Currency Pair by Sid from ElliottWavePredictions.com
Dec 052013
 

usdchf monthly 12-5-13

usdchf weekly 12-5-13

usdchf daily 12-5-13

USDCHF 180m 12-5-13

Elliott Wave Analysis of the USD/CHF Currency Pair by Sid from ElliottWavePredictions.com. Click on the charts twice to enlarge.

The long-term pattern in in the USD/CHF currency pair shows that the August 2011 low was a VERY significant low, essentially ending two terminal Elliott Wave patterns simultaneously. The monthly chart above shows that the 2011 bottom was the end of a decades-long contracting ending diagonal. Also, it shows that wave 5 of the diagonal, which started in October 2000, was an ABC, with the B wave a triangle, and the C wave (in burgundy – primary degree) a terminal thrust from that triangle,. These two terminal patterns put a double exclamation point on that 2011 low, which should mark a very significant low the US Dollar for many years.

Since the August 2011 low, the weekly chart shows a clear 5-wave impulse to the upside ending in July 2012, which confirmed a major trend change in the Dollar from down to up. That impulse was followed by very choppy, overlapping, sideways price action, which the daily chart shows as complete on October 24 as a blue WXYXZ combination correction for black wave 2. That 15-month correction appears to have ended very near the .382 retracement of black wave 1.

Then, as shown on the 180-minute chart, from the October 24-25 lows, the USD/CHF pair carved out a clear 5-wave impulse to the upside ending November 7. That impulse was followed by choppy, overlapping downward movement which today reached a very deep .786 Fibonacci retracement of the Oct-Nov impulse. Choppy overlapping movement is the most difficult to count correctly in real-time from an Elliott Wave standpoint, but if my count shown on the 180-minute chart above is correct, the downward movement is very near an end. With the NFP report coming out tomorrow morning, it appears most likely that an upward impulse in the US$ is imminent, to be NFP kick-started within just a few hours. Invalidation is at .8892, which is less that 80 pips away as of this writing, creating a low-risk, high-reward trading setup.

If this count is invalidated, black wave 2 would have to be continuing in an extended combination correction, with the underlying purpose of seeking a deeper Fibonacci retracement of black wave 1 than .382. This seems unlikely to me at this exact juncture though, because the downward movement since the November 7 high appears corrective in nature. Another reason why I don’t expect invalidation is that the UUP US Dollar ETF, since making the major low in August 2011 (referred to in the first paragraph of this post) has also given 5 blue (minor) waves up for a black (intermediate) wave 1 (July 24, 2012), and a much deeper .786 retracement for its black wave 2 (ending October 23, 2013). Finally, Hurst-Cycle analysis considers that October 23 low the 23.7-month cycle low in the UUP. (See my November 14 post).

Note added mid-day Friday (the next day): NFP didn’t kick start anything, forex-wise.  At least not yet.   It did push equities higher in keeping with my main SPX count, though. The expectation for a fairly immediate stronger US$ will have to wait until trading opens next week to see if it pans out.  Have a great weekend . .

FYI: My schedule has cleared up considerably, so I’ve restarted my On-Demand Service, and will be available to do “On Demands” pretty consistently for the rest of the year.

Sid
http://elliottwavepre.wpengine.com

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