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EURUSD 20th December, 2013

As expected the euro moved towards the upside to reach our first target and exceed it by 20 pips.

Today we have two possible counts, one requires a temporary continuation of this upwards movement, and the other favors an immediate reversal towards the downside. Fortunately, our analysis today provides nearby points of confirmation for each count, and it should be noted that both have nearly equal probabilities at this point.

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: 1.3810 – 1.3662
– Confirmation Point: –
– Upwards Target : 1.3712 – 1.3742
– Wave number: Submicro (5)
– Wave structure: Motive
– Wave pattern: Impulse or Ending Diagonal

Hourly Alternate Count

– Invalidation Point: 1.3708
– Confirmation Point: 1.3624
– Downwards Target : 1.3546 – 1.3446
– Wave number: Subminuette iii
– Wave structure: Motive
– Wave pattern: Impulse

Elliott Wave chart analysis for the EURUSD for 20th December, 2013. Please click on the charts below to enlarge.

Main Daily Wave Count

eurusd-daily

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 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) unfolded 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. There’s also a momentum crossover, which strongly augments this count.

In terms of candlestick patterns, the most recent bar shows a “spinning top” formation, which is typically a pattern of indecision. In other words, it neither confirms nor contradicts our 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

eurusd-h1

eurusd-h1MAC

This count sees that minuette wave (c) is most likely unfolding as an impulse towards the downside.

Within it, subminuette wave i seems to have unfolded as an impulse.

Subminuette wave ii is most likely unfolding as an expanded flat correction labeled micro waves A, B and C.

Micro wave A formed a zigzag labeled submicro waves (A), (B) and (C).

Micro wave B formed a zigzag labeled submicro waves (A), (B) and (C), which retraced a little less than 161.8% of micro wave A.

Submicro wave (A) unfolded as a leading diagonal labeled miniscule waves 1 through 5.

Submicro wave (B) formed a zigzag labeled miniscule waves A, B and C, which retraced 38.2% of submicro wave (A).

Submicro wave (C) formed an impulse labeled miniscule waves 1 through 5, and reached almost 100% the length of submicro wave (A).

After that micro wave C seems to be forming an impulse towards the upside.

Within it, submicro wave (1) unfolded as an impulse.

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

Submicro wave (3) formed an impulse that reached 200% the length of submicro wave (1).

Submicro wave (4) may be complete, or it may be unfolding as a more complex correction, possibly a triangle. If it’s still incomplete, it’ll probably finish its subdivisions shortly.

This count expects submicro wave (5) to start unfolding towards the upside, either as an impulse or an ending diagonal.

The MACD indicator is neutral at this point. It indicates upwards momentum, which is in agreement with this count, but it looks like the signal line might crossover towards the downside soon.

Candlestick analysis reveals several conflicting patterns, which is typical of fourth wave corrections, so it’s not reliable at this point.

At 1.3712 submicro wave (5) would reach 61.8% the length of submicro wave (3) and subminuette wave ii would retrace 38.2% of subminuette wave i, then at 1.3742 submicro wave (5) would reach 100% the length of submicro wave (3) and subminuette wave ii would retrace about 61.8% of subminuette wave i.

This wave count is invalidated by movement above 1.3810 as subminuette wave ii may not move beyond the start of subminuette wave i. It’s also invalidated by movement below 1.3662 as within the impulse of micro wave C submicro wave (4) may not enter into the price territory of submicro wave (1).

Alternate Hourly Wave Count

eurusd-h1

This alternate count sees that subminuette wave ii is now complete, having unfolded as a double combination labeled micro wave W, X and Y.

Micro wave W formed a zigzag labeled submicro waves (A), (B) and (C).

Micro wave X formed a zigzag labeled submicro waves (A), (B) and (C), which retraced a little less than 161.8% of micro wave A.

And micro wave Y formed a zigzag labeled submicro wave (A), (B) and (C), and reached 200% the length of micro wave W.

The entire correction of subminuette wave ii has retraced a few pips less than 38.2% of subminuette wave i.

This count expects that subminuette wave iii has just begun unfolding towards the downside. This would be confirmed by movement below 1.3624.

Candlestick analysis sees an impressive “shooting star” pattern at the end of subminuette wave ii, which is a traditionally strong reversal pattern. This does support this count, but it’s not yet conclusive.

At 1.3546 subminuette wave iii would reach 100% the length of subminuette wave i, then at 1.3446 it would reach 161.8% of its length. We’ll be able to calculate more near-term targets once subminuette wave iii begin to subdivide.

This wave count is invalidated by movement above 1.708 as within subminuette wave iii no second wave may move beyond the start of the first wave.

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