EURUSD 26th December, 2013

As expected under the main count, the euro moved towards the upside to reach both of our targets and exceed them by 6 pips. Naturally it was a very slow day, given the low volume that usually accompanies the holidays.

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: 1.3654
– Upwards Target : 1.3636 – 1.3598
– Wave number: Submicro (3)
– Wave structure: Motive
– Wave pattern: Impulse

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 26th 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, 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 divergence 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 small “spinning top” pattern, which typically indicates indecision, so 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

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.

Within it, submicro wave (1) unfolded as a leading diagonal labeled miniscule waves 1 through 5.

Submicro wave (2) probably unfolded as a zigzag labeled miniscule waves A, B and C, and retraced well over 61.8% of submicro wave (1), so it is most likely complete.

Note: the flat bars shown at the beginning of miniscule wave C are just placeholders for the day during which the market was closed, so they should be ignored.

This count expects submicro wave (3) to start unfolding towards the downside. This would be confirmed by movement below 1.3654.

At 1.3636 submicro wave (3) would reach 100% the length of submicro wave (1), then at 1.3598 it would reach 161.8% of its length.

The MACD shows a bearish momentum divergence, which would normally augment this count. But given that momentum indicators are not reliable during times of low volume, we wouldn’t want to use it at this time.

Candlestick analysis also reveals a series of upward-moving spinning tops, followed by a bearish engulfing pattern, which would also support this count. But due to their negligible size, they don’t present us with any useful information at this point.

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).

Alternate Hourly Wave Count

eurusd-h1

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.

Micro wave Y may be unfolding as a zigzag labeled submicro waves (A), (B) and (C).

Submicro waves (A) and (B) are probably complete. And within submicro wave (C), miniscule waves 1 and 2 may be complete as well.

This count expects submicro wave (C) of 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 and also submicro wave (C) would reach 261.8% the length of submicro wave (A).

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.

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