Yesterday the euro invalidated our main count by moving towards the downside and reaching the 1.1214 price level. And even though it didn’t break the invalidation point by a significant margin, this overlap – along with the extended nature of this downwards movement – strongly suggest a change in trend.
The coming 2-3 days will be important for determining the new direction of the euro. If price moves upwards in a corrective, slow and overlapping fashion, this will increase our confidence that the trend has turned towards the downside. At any rate, and unless you have a solid system of risk management, we think it would be wiser not to engage the market today, and instead to wait for this correction to be complete before riding the third wave downwards.
We’re updating our counts to reflect the most recent price action and to present tighter targets and invalidation points.
Hourly Main Count
– Invalidation Point: 1.1718
– Confirmation Point: 1.1308 – 1.1364
– Upwards Target: 1.1400 – 1.1521
– Wave number: Minor 2
– Wave structure: Corrective
– Wave pattern: Zigzag, Flat, or Combination
Elliott Wave chart analysis for the EURUSD for 27th August, 2015. Please click on the charts below to enlarge.
Main Daily Wave Count
The bigger picture sees that the euro is still moving towards the downside in primary wave C, which is forming an impulse labeled intermediate waves (1) through (5).
Intermediate wave (4) formed a double combination labeled minor waves W, X and Y.
Within it, minor wave W formed a zigzag labeled minute waves a, b and c.
Minor wave X formed a double zigzag labeled minute waves w, x and y, retracing a bit over 61.8% of minor wave w.
Minor wave Y also formed a zigzag labeled minute waves a, b and c.
Within it, minute wave b formed a running flat labeled minuette waves (a), (b) and (c), retracing almost 38.2% of minute wave a.
Minute wave c reached twice the length of minute wave a, and touched the upper trend line of the channel drawn around minor waves W, X and Y.
This count expects the euro to start moving towards the downside in intermediate wave (5), which will either form an impulse or an ending diagonal labeled minor waves 1 through 5, to complete primary wave C of cycle wave x. This will be confirmed by movement below 1.1017.
At 1.0462 intermediate wave (5) would reach the end of intermediate wave (3), then at 1.0220 it would reach 61.8% the length of intermediate wave (3).
This wave count is invalidated by movement above 1.1718 as minor wave 2 may not move beyond the start of minor wave 1.
Main Hourly Wave Count
This count sees that minor wave 1 of intermediate wave (5) formed a leading diagonal labeled minute waves i through v, each subdividing as a zigzag labeled minuette waves (a), (b) and (c).
Within it, minute wave iii reached slightly over 78.6% the length of minute wave i, and minute wave v reached exactly 61.8% the length of minute wave iii, so it’s most likely complete or near completion.
This count expects the euro to start moving towards the upside in minor wave 2. This will be somewhat confirmed by movement above 1.1308, with higher confirmation above 1.1364.
At 1.1400 minor wave 2 would retrace 38.2% of minor wave 1, then at 1.1521 it would retrace 61.8% of its length.
This wave count is invalidated by movement above 1.1718 as minor wave 2 may not move beyond the start of minor wave 1. No invalidation point may be placed on the downside at this point, as minor wave 2 may develop into an expanded flat.