As expected the euro moved towards the upside to reach our first target and come 12 pips short of the second target. This correction seems complete and we may be close to a trend reversal.
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: 1.3727
– Downwards Target : 1.3656 – 1.3556
– Wave number: Micro 3
– Wave structure: Motive
– Wave pattern: Impulse
Elliott Wave chart analysis for the EURUSD for 30th 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 augments this count by showing multiple bearish divergences. While price has made higher and higher tops, momentum is consistently decreasing, forming lower highs. If the MACD also shows a “fake” crossover, this would further augment this count.
In terms of candlestick patterns, the most recent bar shows a “doji” pattern, which indicates hesitation. And putting it within the context of the previous uptrend, it could indicate a slowing down of bullish pressure and a possible bearish signal.
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 the euro is most likely moving within subminuette wave a of minuette wave (ii) to the downside.
Within subminuette wave a, micro wave 1 is complete.
Micro wave 2 unfolded as an expanded flat labeled submicro waves (A), (B) and (C) and retraced 50% of micro wave 1. It may still continue upwards to the 61.8% retracement level at 1.3830, but it’s already in a position to be complete.
This count expects micro wave 3 to start unfolding towards the downside. This will be initially confirmed by movement below 1.3727.
At 1.3656 micro wave 3 would reach 100% of micro wave 1, then at 1.3556 it would reach 161.8% of its length.
The MACD is about to register a bearish momentum crossover. If it does crossover, this would strongly augment this count.
In terms of candlestick analysis, the most recent bars show a “hammer” pattern followed by a “hanging man” pattern. This shows a conflict of forces and indicates possible weakening of the previous trend, which had been upwards.
This wave count is invalidated by movement above 1.3892 as micro wave 2 may not move beyond the start of micro wave 1. We’ll be able to lower our invalidation point to the end of micro wave 2 once price reaches our confirmation point.