EURUSD 10th December, 2013

The euro moved exactly as expected, first dipping down a little lower, then pushing up to make a slight new high, before finally reversing towards the downside. The euro has been long due for a bearish reversal, even if only as a corrective decline, and it looks like today we may see this beginning to unfold.

We’re updating our counts to reflect the most recent price action and to present tighter targets and invalidation points.

Hourly Main Count

– Invalidation Point: 1.3831
– Confirmation Point: 1.3618
– Downwards Target : 1.3523 – 1.3293
– Wave number: Minuette (c)
– Wave structure: Motive
– Wave pattern: Impulse or Ending Diagonal

Elliott Wave chart analysis for the EURUSD for 10th December, 2013. Please click on the charts below to enlarge.

Main Daily Wave Count

eurusd-daily

The bigger picture sees the euro within primary wave B to the upside, and within that in intermediate wave (C), and within that in minor wave 3.

Within minor wave 3, minute waves i unfolded as an impulse labeled minuette waves (i) through (v) and minute wave ii is most likely unfolding as a zigzag labeled minuette waves (a), (b) and (c).

Minuette wave (b) probably unfolded as a deep double zigzag labeled subminuette waves w, x and y, which retraced over 78.6% of minuette wave (a).

This count expects that minuette wave (b) is now complete or very near completion, to be followed by a continuation of downwards movement in minuette wave (c) to complete minute wave ii. This will be confirmed by movement below 1.3398.

At 1.3293 minute wave ii would retrace 50% of minute wave i, then at 1.3165 it would retrace 61.8% of its length.

This wave count is invalidated by movement below 1.2754 as minute wave ii may not move beyond the start of minute wave i. It’s also invalidated by movement above 1.3831 as within the zigzag of minute wave ii minuette wave (b) may not move beyond the start of minuette wave (a).

Main Hourly Wave Count

eurusd-h1

eurusd-h1MAC

This count sees that the euro has probably just completed micro wave C of subminuette wave y of minuette wave (b).

Micro wave C unfolded as an impulse labeled submicro waves (1) through (5).

Within micro wave C, submicro wave (1) formed an impulse.

Submicro wave (2) formed a running flat that retraced 78.6% of submicro wave (1).

Submicro wave (3) formed an impulse that reached almost 161.8% the length of submicro wave (1).

Submicro wave (4) retraced a little over 38.2% of submicro wave (3).

And finally submicro wave (5) has formed an impulse, labeled miniscule waves 1 through 5, that reached over 161.8% the length of submicro wave (1).

This count expects that the euro has completed the entire correction of minuette wave (b) and is now in the early stages of its downwards movement in minuette wave (c) to complete minute wave ii towards the downside. This will be confirmed by movement below 1.3618.

This count is augmented by the presence of clear MACD divergence. While price has been making higher highs, the MACD has consistently failed to reflect a similar behavior in momentum, which has been steadily decreasing. The divergence between price and momentum at the ends of submicro waves (3) and (5), then between miniscule waves 3 and 5 within submicro wave (5), is a very strong indicator of the completion of both patterns.

As of yet there is no clear candlestick pattern on the hourly chart that would support or contradict this count, although the daily chart is showing an ideal Shooting Star pattern at the end of minuette wave (b), which is another strong indicator that a top may well be in place.

Our initial target for this new downtrend is at 1.3523, and price is expected to drop to 1.3293 over the coming days. We’ll be able to calculate more precise targets once minuette wave (c) begins to subdivide.

This wave count is invalidated by movement above 1.3831 as within the zigzag of minute wave ii minuette wave (b) may not move beyond the start of minuette wave (a). And once price reaches our confirmation point, we may lower the invalidation point to the end of minuette wave (b), which is currently at 1.3794.

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