Monday, May 17, 2010

EUR/USD Downside target realized, and then some...

Back from a very restful vacation taken during one of the most volatile times in the market in memory. Equity markets dropping 9%+ in a matter of minutes a week ago Thursday, and the Euro seemingly freefalling through support levels of the past few years.

I must admit, I did keep an eye on the markets, and even placed a few short positions in the EUR/USD... I couldn't resist. No posts though... had to keep my family commitments first!

Clearly, the Euro has blown clearly through the target of 1.289 in mid-May I had posted back in March... and it did so without much resistance at all, which throws the entire idea of a lower yellow trendline (shown for the last time below) holding back selling pressure. And this morning, another breakthrough to 4 year lows! What a time to take a vacation!

Since it has been awhile since I have posted my position on elliott wave counts on the EUR/USD, rather than dive right back into the short term charts, I thought I would get back into the swing of things with an update on the minor degree count I think is most probable governing the trend since last November, and speculate a bit about where I see the market possibly moving from here.

The biggest change in the minor count I am following is that it appears that wave 5 is extending. It is very common for 1 wave to extend in an impulsive wave, and since wave 1 and wave 3 are nearly equal, it is ideal for me in identifying the larger wave structure that wave 5 extends because the presence of an extension reinforces that we are indeed in an impulsive wave. 

There are certainly other more bearish counts from some very smart analysts. One of which has us in the throws of an intermediate wave 3 after a series of 1-2's. I would rather not go into the pro's and con's of other views right now, and would rather stick with the one that has made the most sense to me along the way beginning, and has worked out very well for trading purposes.

This count has some more downside ahead moving toward a completion of 5 minor waves down (intermediate 1 wave completion), which I speculate will be followed by an intermediate wave 2 that if it is an ideal second wave, should last for a few months and take us into the most common retracement fibonacci levels and end within the previous minor wave 4 price range.
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