The euro moved precisely as expected last week, first moving lower in a temporary sideways correction before pushing higher to complete the diagonal we discussed in our last analysis.
Price has been making higher highs and higher lows for a while now, suggesting that an uptrend is likely in place. However, this upwards movement is overlapping and not very consistent, so the verdict is still out on this point.
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.
6-Hour Main Count
– Invalidation Point: 1.3476
– Confirmation Point: –
– Downwards Target : 1.3691 – 1.3609
– Wave number: Minuette (ii)
– Wave structure: Corrective
– Wave pattern: Zigzag, Flat, or Combination
6-Hour Alternate Count
– Invalidation Point: 1.3642
– Confirmation Point: –
– Upwards Target : 1.3853 – 1.3911
– Wave number: Subminuette v
– Wave structure: Actionary Corrective
– Wave pattern: Zigzag
Elliott Wave chart analysis for the EURUSD for 28th February, 2014. Please click on the charts below to enlarge.
Main 6-Hour Wave Count
The bigger picture sees the euro moving upwards in minute wave iii, and within that in minor wave C, and within that in intermediate wave (Y) or Primary wave D.
Minute wave iii is unfolding as an impulse. Within it, minuette wave (i) formed a leading diagonal labeled subminuette waves i through v, each of which subdivided into a zigzag or a double zigzag.
This count expects that minuette wave (i) is now complete and that minuette wave (ii) is unfolding towards the downside.
The MACD indicator supports this count by showing very strong bearish divergence between the ends of subminuette waves iii and v.
In terms of candlestick analysis, the next-to-last was something between a “spinning top” and a “shooting star,” both of which are commonly viewed as indecision and/or reversal patterns. A bearish gap at the beginning of the week also supports this count.
At 1.3691 minuette wave (ii) would retrace 38.2% of minuette wave (i), then at 1.3609 it would retrace 61.8% of its length.
This wave count is invalidated by movement below 1.3476 as minuette wave (ii) may not move beyond the start of minuette wave (i).
Alternate 6-Hour Wave Count
This count sees that subminuette wave v of minuette wave (i) is still unfolding.
Within it, micro wave A is near completion, to be followed by a downwards correction in micro wave B, and finally another upwards leg in micro wave C to complete subminuette wave v.
At 1.3853 subminuette wave v would reach 100% the length of subminuette wave iii, then at 1.3911 it would reach 127.2% of its length.
This wave count is invalidated by movement below 1.3642 as within the zigzag of subminuette wave v micro wave B may not move beyond the start of micro wave A.