Instead of moving directly towards the downside as expected, the euro spent the day moving up and down within a converging range. Momentum is following suit by forming a helix shape around the zero line of the MACD.
These are the typical signs of a contracting triangle, which is why we’re changing our main count to reflect this possibility. But keep in mind that triangles are tricky patterns, and they often morph into more complex forms and subdivisions.
So our strategy for the time being will be to follow price developments closely and keep tight invalidation points at every step, until we’re sure each wave of the triangle is complete.
We’re updating our counts to reflect the most recent price action and to present tighter targets and invalidation points.
By movement above 1.1224, EURUSD would be expected to find resistance between 1.1247 and 1.1259, while remaining below 1.1269 and above 1.1198.
Hourly Main Count
– Invalidation Point: 1.1269 – 1.1198
– Confirmation Point: 1.1224
– Upwards Target: 1.1247 – 1.1259
– Wave number: Submicro (D)
– Wave structure: Corrective
– Wave pattern: Zigzag or Zigzag Combination
Elliott Wave chart analysis for the EURUSD for 13th September, 2016. Please click on the charts below to enlarge.
Main Daily Wave Count
The bigger picture sees that the euro is moving sideways in black wave (B), which is forming a contracting triangle labeled blue waves A through E.
Within it, blue wave D is unfolding as a double zigzag labeled pink waves w, x and y.
Within it, pink wave y is forming a zigzag labeled green waves (a), (b) and (c).
Within it, green wave (a) is forming an impulse labeled orange waves i through v.
Within, orange wave ii is likely forming a double zigzag labeled violet waves W, X and Y.
This count expects the euro to continue moving towards the upside in orange wave ii.
This wave count is invalidated by movement above 1.1366 as orange wave ii may not move beyond the start of orange wave i.
Main Hourly Wave Count
This main count sees that orange wave ii is forming a double zigzag labeled violet waves W, X and Y.
Within it, violet wave W formed a zigzag labeled aqua waves (A), (B) and (C).
Violet wave X is probably forming a contracting triangle labeled aqua waves (A) through (E).
Within it, aqua waves (A), (B) and (C) each formed a zigzag labeled red waves A, B and C.
Aqua wave (C) reached exactly 50% the length of aqua wave (A). It’s most likely complete.
This count expects the euro to move towards the upside in aqua wave (D). This will be initially confirmed by movement below 1.1224.
At 1.1247 aqua wave (D) would reach 61.8% the length of aqua wave (B), then at 1.1259 it would retrace 61.8% of aqua wave (C).
This wave count is invalidated by movement above 1.1269 as aqua wave (D) of a contracting triangle may not move beyond the start of aqua wave (C). It’s also invalidated by movement below 1.1198 as aqua wave (C) of a contracting triangle may not move beyond the start of aqua wave (B).
Note that even if price moves beyond either of these invalidation points, it’s possible for the triangle scenario to remain valid by relabeling its subdivisions. This is frustrating for a trader who needs to have solid entry/exit points, but it’s necessary for the analyst who needs to consider all reasonable possibilities. The good news is that, as the pattern continues to develop, we should be able to provide more useful price points soon.
Alternate Daily Wave Count
This alternate count sees that pink wave x is forming a triple zigzag labeled green waves (w) through (z).
Within it, green waves (w), first (x), and (y) are complete, and the second green wave (x) may or may not be complete.
This count expects the euro to be moving towards the upside in green wave (z) to complete pink wave x. This will be confirmed by movement above 1.1366.
At 1.1366 green wave (z) would reach the high of green wave (y), then at 1.1466 pink wave x would retrace 78.6% of pink wave w.
This wave count is invalidated by movement above 1.1616 as pink wave x of a double zigzag may not move beyond the start of pink wave w. It’s also invalidated by movement below 1.0952 as it’s virtually unheard of for a second green wave (x) to move beyond the end of the first green wave (x) in a triple zigzag.