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EURUSD 4th January, 2014

As expected the euro moved towards the upside to reach our first target and come within 19 pips of reaching our second target. The current fourth wave has come well into the area of the previous fourth wave of one-lower degree, which is the typical level for reversal, but it may still move higher.

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: 1.3730 – 1.3570
– Confirmation Point: 1.3652
– Upwards Target : 1.3671
– Wave number: Micro 4
– Wave structure: Corrective
– Wave pattern: Combination

Hourly Alternate Count
– Invalidation Point: 1.3652
– Confirmation Point: 1.3570
– Downwards Target : 1.3552 – 1.3490
– Wave number: Micro 5
– Wave structure: Motive
– Wave pattern: Impulse or Ending Diagonal

Elliott Wave chart analysis for the EURUSD for 4th January 2014. Please click on the charts below to enlarge.

Main Daily Wave Count

eurusd-daily

eurusd-macd-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 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.

This count expects that minuette wave (ii) is now unfolding towards the downside, most likely as a zigzag.

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. The MACD also shows a bearish crossover, which further augments this count.

In terms of candlestick analysis, the last bar resembles a “spinning top,” which is generally a sign of indecision and anticipation.

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

eurusd-h1

eurusd-macd-h1

This count sees the euro moving within subminuette wave a of minuette wave (ii) to the downside.

Within subminuette wave a, micro waves 1 and 2 are complete.

Micro wave 3 extended towards the downside as an impulse labeled submicro waves (1) through (5), and came close to 161.8% the length of micro wave 1.

Micro wave 4 is most likely unfolding as a combination labeled submicro waves (W), (X) and (Y).

Submicro wave (W) formed an expanded flat labeled miniscule waves A, B and C.

Submicro wave (X) retraced over 61.8% of submicro wave (W).

Submicro wave (Y) is most likely unfolding as a zigzag labeled miniscule waves A, B and C.

This count expects submicro wave (Y) to move a bit further towards the upside to complete micro wave 4. This will be confirmed by movement above 1.3652.

The MACD is rather neutral at this point, giving no evidence to either support or contradict this count.

In terms of candlestick analysis, no significant pattern appears at this point, although it’s clear that upwards bars are strong and impulsive while downwards bards are short and corrective so far.

At 1.3671 micro wave 4 would retrace 38.2% of micro wave 3.

This wave count is invalidated by movement above 1.3730 as within the impulse of subminuette wave a micro wave 4 may not enter the price territory of micro wave 1. It’s also invalidated by movement below 1.3570 as it’s extremely unlikely for a correction (other than an expanding triangle) to make two new lows beyond that of the preceding impulse.

Alternate Hourly Wave Count

eurusd-h1

This count sees that micro wave 4 is already complete as a double combination of a slightly different labeling.

This count expects micro wave 5 to be already moving towards the downside. This will be confirmed by movement below 1.3570.

At 1.3552 micro wave 5 would reach 61.8% the length of micro wave 1, then at 1.3490 it would reach 100% of its length.

This wave count is invalidated by movement above 1.3652 as within micro wave 5 no wave may move beyond the start of the first wave.

Alternate Daily Wave Count

eurusd-daily

This alternate daily count sees that minuette wave (ii) has been unfolding as a short zigzag that’s either complete or very near completion.

This count expects that minuette wave (ii) will be over soon and that minuette wave (iii) will start unfolding towards the upside.

At 1.4168 minuette wave (iii) would reach 100% the length of minuette wave (i), then at 1.4537 it would reach 161.8% 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). And once we’ve confirmed that minuette wave (iii) has indeed begun, we may raise the invalidation point to the end of minuette wave (ii), which currently stands at 1.3570.

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