Friday, March 26, 2010

EUR/USD Elliott Count Update

EUR/USD is testing the upper purple trendline that has held price action since the start of the latest downtrend (what I count as a wave V) since March 17th.

So that I do not confuse anyone, I have changed the notation on the degree of counts that I am showing on the charts. I am showing the more commonly accepted Elliott notation for the degree of trend we are likely in. This doesn't change any of the analysis, except you will see a i in place of where a 1 was in previous posts.

Back to business...
I am sticking with the same count I have been showing unless we break back through the red trendline that we broke through a few days back... see post Anatomy of A Break, AND we break through 1.3501 (wave i). A break at this level would assure that this bounce is not a wave iv as a wave iv cannot cross over any of the area of a wave i per Elliott rules.

If we do break through these levels, then the most likely count is a bullish one... that the entire 5 wave decline from last November is complete. Prices need to fall back below the new short term yellow trend channel to get the bearish count back on track.

Because the alternate is so bullish, it is very important to assess your risk. Take a look at my post on the subject from yesterday morning: Time to Start Assessing Risk

Here's the primary and bullish alternate counts:

Bearish fib fans have been broken, we had a new low on diverging RSI, we may have a break of the upper purple trend channel, and at the very short term, I can count a possible 5 waves up.

It looks to me like the market wants to try to head back up to the previous significant trendchannel that it broke a few days ago (red). This started getting some crazy ideas in my head about a possible touch and go scenario that might be much more bearish than my primary count. It's a long shot at this point, but I thought I would introduce to get your thoughts. This may be a way for the market to fulfill the scenario I map out in my EUR/USD Longer Term View. We'll see what the market gives us...

We're getting close to the weekend so I doubt any major moves are going to happen either way on a Friday afternoon. 

I took profits yesterday on my shorts near lows, attempted to get back in at 1.385 for a potential quick reversal, but sold after the move above 1.3408. Still a very, very good week for me, and now it is time to watch and wait for the next opportunity. Hope you all had a successful trading week!
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