The euro moved upwards as expected by both of our counts. However, it continued upwards in a very impulsive manner, shooting through all of our targets as well as the invalidation points of both counts.
This development may seem surprising, but it actually fits very nicely with another count we had in store.
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: 1.3892
– Confirmation Point: –
– Upwards Target : 1.3792 – 1.3830
– Wave number: Micro 2
– Wave structure: Corrective
– Wave pattern: Zigzag, Flat, or Combination
Elliott Wave chart analysis for the EURUSD for 27th 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 unfolded as a zigzag labeled minuette waves (a), (b) and (c) which retraced 50% of minute wave i.
Minute wave iii is forming an extension. Within it, minuette wave (i) unfolded as an impulse labeled subminuette waves i through v, which are well contained within their Elliott channel. Within it subminuette wave iii unfolded as another impulse labeled micro waves 1 through 5.
This count expects that minuette wave (ii) is now unfolding towards the downside, most likely as a zigzag. This will be initially confirmed by a break below the lower trend line of the channel drawn around the subdivisions of minuette wave (i).
The MACD indicator strongly augments this count by showing multiple bearish divergences. While price has made higher and higher tops, momentum is consistently decreasing, forming lower highs.
In terms of candlestick patterns, the most recent bar shows a formidable “shooting star” pattern, which is a very strong bearish signal that further augments this count.
At 1.3664 minuette wave (ii) would retrace 38.2% of minuette wave (i), then at 1.3523 it would retrace 61.8% of its length.
This wave count is invalidated by movement below 1.3294 as minuette wave (ii) may not move beyond the start of minuette wave (i). It’s also invalidated by movement above 1.3892 as within a zigzag a B-wave may not move beyond the start of the A-wave.
Main Hourly Wave Count
This count sees that, within the impulse of minuette wave (i), subminuette waves i through iii unfolded normally.
Subminuette wave iv unfolded as a protracted contracting triangle labeled micro waves A through E.
Micro wave A formed a double zigzag, micro wave B formed another double zigzag, micro wave C formed a triple zigzag, then micro waves D and E both unfolded as regular zigzags.
Once subminuette wave iv was complete, subminuette wave v moved in the typical manner expected from a post-triangle thrust. It shot up to reach and exceed the origin of the triangle, before immediately reversing and retracing over 3/4 of its advance, as part of the retracement in minuette wave (ii).
Minuette wave (ii) is most likely unfolding as a zigzag labeled subminuette waves a, b and c.
Within subminuette wave a, micro wave 1 seems complete, although it may still move further downwards.
This count expects that micro wave 2 will start unfolding towards the upside. Assuming micro wave 1 is indeed complete, then at 1.3792 micro wave 2 would retrace 38.2% of micro wave 1, then at 1.3830 it would retrace 61.8% of its length. If micro wave 1 moves further down before reversing, then these targets should be readjusted accordingly.
At this point, neither the MACD nor candlestick analysis can give any serious insights to either support or contradict this count, so we’ll have to wait for further development before making use of these two tools.
This wave count is invalidated by movement above 1.3892 as micro wave 2 may not move beyond the start of micro wave 1.