Thursday, April 22, 2010

EUR/USD Breaks Through to New Low!

I was watching for a new low and now we have it, and with a nice break of both the short term (green), and long term (white) trend channel lines. And so far, I do not see signs of the downtrend diminishing. Because we have not had a significant counter-trend move that I have mentioned might take place over the last few days in what could be called a "wave e", I have lowered the probability of the diagonal 4th wave pattern that I have had as primary over the last week, and gone back to the ending diagonal 5th option from last week.

There are always alternatives in elliott wave analysis, and it is sometimes challenging to know which one is playing out in real time. From my recent post though, I hope everyone has been taking away the most important lessons I have learned while trading using elliott wave... when both the top and alternate scenarios are pointed in the same direction, you can be wrong on the exact pattern and still have winning trades.

Again today the difference matters very little for the short term. Likely more room to the downside. The next area to watch for for this round of selling to end is along the lower blue trendline, which is currently declining through 1.3120. I will be specifically watching for a crossover in the MACD, and a divergence between new price lows and RSI extremes to help judge whether the trend may be changing.

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