A lot has happened over the past month, and the market is now showing a familiar and clear pattern.
Our longer-term view is that the price is doomed for even further declines. However, as we well know, no market movement happens in a straight line. Incidentally, all the current conditions are announcing that the time has come for an upwards correction, one that may last for several months.
We’re updating our count to reflect the most recent price action and to present tighter targets and invalidation points.
Monthly Main Count
– Invalidation Point: 1.3993
– Confirmation Point: 1.2887
– Upwards Target : 1.2983 – 1.3369
– Wave number: Intermediate (B)
– Wave structure: Corrective
– Wave pattern: Zigzag, Flat, Triangle, or Combination
Elliott Wave monthly chart analysis for the EURUSD for 7th November 2014. Please click on the charts below to enlarge.
Main Monthly 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, C and D are complete.
Primary wave D unfolded as a double zigzag labeled intermediate waves (W), (X) and (Y), each subdividing as a zigzag labeled minor waves A, B and C.
Within intermediate wave (Y), minor wave A formed an impulse labeled minute waves i through v.
Minor wave B retraced 50% of minor wave A.
Minor wave C formed an ending diagonal labeled minute waves i through v.
Right now, price is moving towards the downside in primary wave E, which is the final subdivision in the contracting triangle of cycle wave x.
Primary wave E is most likely unfolding as a zigzag labeled intermediate waves (A), (B) and (C).
Intermediate wave (A) unfolded as an impulse labeled minor waves 1 through 5.
Within it, minor wave 2 retraced 38.2% of minor wave 1.
Minor wave 3 reached nearly 261.8% the length of minor wave 1.
Minor wave 5 reached 100% the length of minor wave 1.
This count expects that minor wave 5, and thereby intermediate wave (A), is complete and that the euro is now moving towards the upside in intermediate wave (B). This will be confirmed by movement above 1.2887.
Momentum indicators supports this count by showing an extremely oversold situation.
At 1.2983 intermediate wave (B) would retrace 38.2% of intermediate wave (A), then at 1.3369 it would retrace 61.8% of its length.
This wave count is invalidated by movement above 1.3993 as intermediate wave wave (B) within this zigzag may not move beyond the start of intermediate wave (A). It’s also invalid in the short-term by movement below 1.2358 as this is the presumed start of intermediate wave (B).
If price moves below this short-term invalidation point, then intermediate wave (A) would still be unfolding, but the downwards potential should be quite limited. To preserve the triangle count, price may not move below 1.2042 as primary wave E may not move beyond the start of primary wave D.
If price moves below even 1.2042, then the triangle had actually ended at the high which is currently labeled as primary wave D, and the following 5-waves down are actually the first wave within a downwards impulse.