The euro seems to have started moving towards the upside as expected. So far its movement has been slow and unimpressive, but given that we expect it to be part of a larger correction, this isn’t too surprising.
Almost nothing changed with our current analysis, although we made some small modifications to simplify and better fit the recent price movement.
P.S.: This update was scheduled to be published at its regular time (i.e. around the market open time), but unfortunately I got very sick and only managed to function properly a short while ago. Please accept my sincerest apology for this delay. On the plus side, price is still moving within the expectations of our last analysis, we haven’t missed much.
Hourly Main Count
– Invalidation Point: 1.3995 – 1.3616
– Confirmation Point: –
– Upwards Target : 1.3713 – 1.3766
– Wave number: Subminuette iii
– Wave structure: Motive
– Wave pattern: Impulse
Elliott Wave chart analysis for the EURUSD for 26th May 2014. Please click on the charts below to enlarge.
Main Daily Wave Count
The bigger picture sees the euro moving sideways in cycle wave x, which is forming a contracting triangle labeled primary waves A through E.
Within it, primary waves A, B and C are complete.
Primary wave D unfolded as a double zigzag labeled intermediate waves (W), (X) and (Y), each subdividing into a zigzag labeled minor waves A, B and C.
Within intermediate wave (Y), minor wave C formed an ending diagonal labeled minute waves i through v, reaching just above 61.8% the length of minor wave A.
Primary wave D as a whole has reached the typical 61.8% the length of primary wave B. Given all these indications, it’s highly likely that primary wave D is now complete.
This count expects that the euro is now moving towards the downside in minor wave 1, within intermediate wave (A), within primary wave E, to complete cycle wave x. This will be initially confirmed by movement below 1.3295.
The MACD indicator supports this count by showing a bearish crossover, as well as a series of clear bearish divergences.
In terms of candlestick analysis, the enormous Bearish Engulfing Pattern at the end of primary wave D strongly supports this count as well.
At 1.2789 primary wave E would retrace 61.8% of primary wave D, then at 1.2201 it would reach 61.8% the length of primary wave C.
This wave count is invalidated by movement above 1.3995 as within the zigzag of primary wave E no wave may move beyond the start of the first wave. It’s also invalidated by movement below 1.2043 as primary wave E may not move beyond the end of primary wave C.
Main Hourly Wave Count
This count sees that the euro is moving towards the downside in minor wave 1, which is most likely unfolding as an impulse labeled minute waves i through v.
Minute wave i formed an impulse labeled minuette waves (i) through (iv).
Minute wave ii is unfolding towards the upside as an expanded flat labeled minuette waves (a), (b) and (c).
Minuette wave (a) formed a zigzag labeled subminuette waves a, b and c.
Minuette wave (b) formed a zigzag labeled subminuette waves a, b and c, and has retraced exactly 138.2% of minuette wave (a), so it’s most likely complete.
This count expects the euro to continue its upwards movement in minuette wave (c) to complete minute wave ii.
Within minuette wave (c), it’s possible that subminuette waves i and ii are complete or very near completion, so we expect the euro to continue moving upwards in subminuette wave iii.
The MACD indicator neither supports nor contradicts this count yet. On the one hand, it’s showing strong bullish momentum, with both the fast and slow lines comfortably above the zero-line. On the other hand, we’ve just seen a bearish crossover, but this is to be expected after such a quick and strong rise in momentum.
In terms of candlestick analysis, this count is supported by the Hammer candlestick bar at the end of what we expect to be subminuette wave ii.
At 1.3713 subminuette wave iii would reach 161.8% the length of subminuette wave i, then at 1.3766 it would reach 261.8% of its length.
This wave count is invalidated by movement above 1.3995 as minute wave ii may not move beyond the start of minute wave i. It’s also invalidated by movement below 1.3616 as subminuette wave ii may not move beyond the start of subminuette wave i.