Tuesday, March 30, 2010

EUR/USD Short Term Elliott Count Update

An update before we head into evening action. Short term counts have changed slightly, but message is the same.

Primary count is bearish... we likely have further on the downside before a more significant retracement of the price movement since last November highs (wave 2 up).

The alternate is that the downside is over for now, and we are in a multi-month rally that should retrace into the fibonacci zone.

The move up yesterday breached through where my wave 1 was at, eliminating the wave 4 count I was following, so the 1-2 count is now in play. The one I have posted is a 3 wave move down, which infers that the larger wave 5 will be an ending diagonal, but the move also can be counted as a full 5 waves down. For practical purposes, it doesnt matter how we count this, as the message is the same near term. We will have to watch for the true pattern to reveal itself with more time.

The move down down from overnight highs above 1.3535 is so far in 3 waves, but we need to watch carefully to see if it turns into 5 on the 15 min charts. If it does not hit a new low before breaching 1.3453 on the upside, then either a small degree wave 2 has higher to retrace, or the alternate, more bullish count is intact.

I have made an effort to draw preliminary trend channel support in red and white that may provide resistance and a stopping point should the latter happen, but do not have high confidence yet in these lines. This morning broke through the lower yellow trend channel I had drawn (see post), so I redrew based on the next available possibility.

I am waiting for now to see if the move on the 15 minute chart turns into a five wave pattern or not. If I were to speculate, I would say that the new lower will break, and we will be heading down to new lows. Major question on the table right now is whether this happens soon, or after a move up near red and white trendlines.

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