Today the euro repeated exactly what it had been doing for the past week. Despite the increasingly improving technical picture, it made another low which exceeded the previous low by about 27 pips.
The added complexity of the developing pattern convinced us that it was time to revisit the bigger picture, which is why we’re presenting today’s analysis on the 2-hour chart for better clarity. However, our near-term, correctively-bullish expectation is still the same. We simply see it as a matter of “when”, not “if.”
We’re updating our count to reflect the most recent price action and to present tighter targets and invalidation points.
Hourly Main Count
– Invalidation Point: 1.3995 – 1.3551
– Confirmation Point: 1.3669
– Upwards Target : 1.3744 – 1.3840
– Wave number: Minute ii
– Wave structure: Corrective
– Wave pattern: Zigzag, Flat, or Combination
Elliott Wave chart analysis for the EURUSD for 28th 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.
We now see that minute wave i is most likely unfolding as a leading diagonal labeled minuette waves (i) through (iv), each subdividing into a zigzag labeled subminuette waves a, b and c.
Minuette waves (i) through (iv) are most likely complete.
Within minuette wave (v), subminuette waves a and b are also probably complete.
Subminuette wave c may be complete, as it has already exceeded 61.8% the length of subminuette wave a and is very close to reaching 100% of its length. It may still continue falling for a short while, possibly to around 1.3583 or 1.3568.
This count expects the euro soon to finish minute wave i and start moving towards the upside in minute wave ii. This will be initially confirmed by movement above 1.3669.
The MACD indicator supports this count by showing a series of clear bullish divergences, indicating that momentum has been steadily favoring the euro for the past 2 weeks, despite the current fall in price.
In terms of candlestick analysis, no clear pattern appears at this point.
At 1.3744 minute wave ii would retrace 38.2% of minute wave i, then at 1.3840 it would retrace 61.8% 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 most likely invalidated by movement below 1.3551 as within a contracting diagonal wave 5 should not be longer than wave 3.