The EURO against the US Dollar has had a lateral fluctuation during the last months, trapped between 1.1024 and 1.1400. In this report, using the Elliott Wave analysis, we are going to unravel the complex price action and translate it into the language of the waves to have a clear action plan and face any situation. Let’s do it!
Long term analysis
On the weekly chart, the EURO had decreased its value against the USD since January 2018, when it was listed at 1.2556. In July 2019, the pair impacted support at 1.1030, that is, a trip of 1500 pips in a year and a half. The trend in a financial market is not perpetual, and the EURO is at a market extreme, which means that we can expect a bounce back to 1.2100 soon. The main question to ask ourselves is “when will happen”?
Elliott Wave Weekly Chart
By calculating the weekly pivot points, we find that level S1 (1.0966) will be a crucial level and a possible end of the bearish wave “i” (blue). With the Fibonacci extension levels for the wave “(v)” (magenta), the 161.8% (1.0920) is very close in weekly terms of the S1 pivot (1.0966) creating an objective area where we expect the “i” wave ( blue) will finish.
Before finding the end of the bearish weekly wave, we need to see a lower low.
Drilling the chart to find answers
In the 4-hour chart, the price is bullish; it is a deep and fast wave “iv” (black) corrective wave. The price must continue to rise this week and reach 1.1250 / 1.1280. This new high is a condition before we start finding the end of the trend.
A short trade will be the main focus when the fourth wave ends, and the minimum target will be at 1.1026. This opportunity will show up in the next few days, and we must be ready with the validation plan at the time the price shows its real intention.
4-hour chart Elliott Wave
The corrective waves in the Elliott Wave theory are traps in the markets; this failed attempts to change the trend always attracts hundreds of traders that take the trade and lose thousands in the direction of the trap. By using Elliott’s waves, it is possible to avoid these traps and have a plan to trade and make money.
Plan for this week
In the EURO we must wait to see a new high (1.1250), when this event happens we proceed to evaluate the reverse structure by applying patterns such as Head and Shoulders, Double Top, etc. When everything is in place, you must pull the trigger to enter the trade.
I wish you a fantastic week in your trading with much success.