The euro had quite a busy day. After spending most of it moving slowly and sideways within a 50-pip range, it suddenly pushed upwards, invalidating our alternate count by less than 1 pip, before immediately reversing downwards to invalidate the main count as well, and to move consistently for about 160 pips.
While this movement may seem chaotic, it actually revealed a clear pattern, which will be the focus of our analysis today.
We’re updating our counts to reflect the most recent price action and to present tighter targets and invalidation points. And as usual we’ll use each count’s invalidation point as confirmation of the other count.
Hourly Main Count
– Invalidation Point: 1.3810
– Confirmation Point: –
– Upwards Target : 1.3710 – 1.3748
– Wave number: Subminuette ii
– Wave structure: Corrective
– Wave pattern: Zigzag, Flat, or Combination
Elliott Wave chart analysis for the EURUSD for 18th December, 2013. Please click on the charts below to enlarge.
Main Daily Wave Count
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 unfolding as a flat correction labeled minuette waves (a), (b) and (c).
Minuette wave (a) unfolded as a zigzag labeled subminuette waves a, b and c.
Minuette wave (b) has been unfolding as a double zigzag labeled subminuette waves w, x and y. It has retraced over 96% of minuette wave (a), fulfilling the requirement of a flat correction.
This count expects that minuette wave (b) is complete and that the euro is now continuing its downwards movement in minuette wave (c) to complete minute wave ii. This will be initially confirmed by movement below 1.3523, with final confirmation below 1.3398.
The MACD indicator is showing a difference between price and momentum, where price has made an nearly equal high whereas momentum failed to come close to its previous high. It also looks like we’re about to have a crossover on the MACD, which would strongly augment this count.
In terms of candlestick patterns, we have a very strong “bearish engulfing” pattern, which also supports this count.
While there’s a very small possibility that minuette wave (b) is unfolding as a triple combination and that the current downwards movement is part of its second wave X, this is highly unlikely.
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. And once the euro reaches our final confirmation point, this count would also be invalidated by movement above 1.3810 as within minuette wave (c) no wave may move above the start of the first wave.
Main Hourly Wave Count
This count sees that minuette wave (b) is now complete, with its final micro wave C of subminuette wave y having subdivided into 5 complete waves labeled submicro waves (1) through (5).
Submicro wave (1) formed an impulse.
Submicro wave (2) formed a running flat.
Submicro wave (3) formed a series of extensions, the first labeled miniscule waves 1 through 5, then miniscule wave 3 extended into nano waves i through v, then nano wave iii extended into subnano waves (i) through (v).
Submicro wave (4) formed a contracting triangle labeled miniscule waves A through E, each subdividing into a zigzag labeled nano waves a, b and c, except for miniscule wave A which subdivided into a double zigzag labeled nano waves w, x and y.
Submicro wave (5) formed a contracting ending diagonal, whose subdivisions can be viewed on a 5-minute chart.
After that and within minuette wave (c), it’s difficult to label the subdivisions clearly at this very early stage. It’s possible that the strong downwards movement we saw today was subminuette wave i, however we have to wait for further price action to determine whether it’s complete or not.
Assuming that subminuette wave i is complete, then this count expects the euro to move upwards subminuette wave ii.
The MACD indicator shows very strong bearish momentum. However, it should be noted that all momentum indicator are not very reliable at the very early stages of impulse formation, particularly after such a strong start.
At 1.3710 subminuette wave ii would retrace 38.2% of subminuette wave i, then at 1.3748 it would retrace 61.8% of its length. If subminuette wave i pushes lower still, then these target will need to be adjusted accordingly.
This wave count is invalidated by movement above 1.3810 as subminuette wave ii may not move beyond the start of subminuette wave i.