Today was a holiday for virtually all trading markets, so nothing has changed with our previous analysis. We’re reproducing it today as a reminder to prepare for when the markets re-open. And of course, we wish you a merry Christmas and a happy new year!
As expected under the main count, the euro moved towards the downside to reach our first target and exceed it by 8 pips. And as the holidays grow nearer, we should expect slow price movements with only a few volatility spikes over the coming week.
We’re updating our counts to reflect the most recent price action and to present tighter targets and invalidation points. As usual we’ll use each count’s invalidation point as confirmation of the other count.
Hourly Main Count
– Invalidation Point: 1.3716
– Confirmation Point: –
– Upwards Target : 1.3677 – 1.3692
– Wave number: Submicro (2)
– Wave structure: Corrective
– Wave pattern: Zigzag, Flat, or Combination
Hourly Alternate Count
– Invalidation Point: 1.3624 -1.3810
– Confirmation Point: 1.3716
– Upwards Target : 1.3721 – 1.3748
– Wave number: Micro Y
– Wave structure: Corrective
– Wave pattern: Zigzag or Flat
Elliott Wave chart analysis for the EURUSD for 24th 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) unfolded as a double zigzag labeled subminuette waves w, x and y, which retraced 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 “hanging man” pattern. But due to its irrelevant location, 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
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 unfolded as an expanded flat correction labeled micro waves A, B and C.
After that subminuette wave iii has begun unfolding towards the downside, and within it micro wave 1 seems to be unfolding as an impulse.
Yesterday we expected that submicro waves (1) and (2) within it were complete, but due to the recent price development, we now expect that submicro wave (1) unfolded as a leading diagonal labeled miniscule waves 1 through 5 and that submicro wave (2) is now unfolding towards the upside as either as a zigzag, a flat, or a combination. Within it, miniscule wave A is probably complete.
This count expects submicro wave (2) to continue unfolding sideways to upwards. At 1.3677 submicro wave (2) would retrace 38.2% of submicro wave (1), then at 1.3692 it would retrace 61.8% of its length.
The MACD histogram shows a clear divergence, where price at the end of miniscule wave 5 made a new low below miniscule wave 3, while momentum has actually made a higher low and is moving higher. This is the typical momentum picture for this pattern and it strongly augments this count.
Candlestick analysis also reveals a bullish “railway track” pattern, which also supports this count.
This wave count is invalidated by movement above 1.3716 as within micro wave 1 submicro wave (2) may not move beyond the start of submicro wave (1). No invalidation point can be placed on the downside as submicro wave (2) may be unfolding as an expanded flat.
Alternate Hourly Wave Count
This alternate count sees that subminuette wave ii is unfolding as a double combination labeled micro waves W, X and Y.
Micro wave W formed a zigzag labeled submicro waves (A), (B) and (C).
Micro wave X formed a triple combination labeled submicro waves (W), (X), (Y), (X) and (Z), which retraced a little over 90% of micro wave W.
Given that the second wave of this correction retraced over 90% of the first wave, the correction may actually be a regular flat instead of a combination. In this case, the final leg upwards should subdivide into 5 waves. However, given the expected choppiness which usually accompanies the holidays, we’ll assume this to be a combination until price proves otherwise.
This count expects micro wave Y to continue unfolding towards the upside to complete subminuette wave ii. This would be confirmed by movement above 1.3716.
At 1.3721 micro wave Y would reach 100% the length of micro wave W, then at 1.3748 subminuette wave ii would retrace 61.8% of subminuette wave i.
This wave count is invalidated by movement below 1.3624 as it’s extremely unlikely for a correction (other than an expanding triangle) to make two new lows below that of the preceding impulse, and it’s even less likely for that to happen in the second wave position. It’s also invalidated by movement above 1.3810 as subminuette wave ii may not move beyond the start of subminuette wave i.