Archives for November 2016
With the intense drama of the U.S. elections – described by many as the most nerve wracking election in the recent history of the United States – it’s not very surprising that the market has had a couple of very interesting weeks as well.
It began with the euro’s sudden, swift rally of nearly 500 pips, which included the biggest single-day action we’ve seen in several months. This was immediately followed by an even more massive decline that wiped out all of the preceding rally, and then some.
Right now the odds are stacked in favor of the long-term bearish scenario. But it’s still early days to be sure, and there’s a definite possibility that this is nothing more than a whiplash of volatility within a remarkably prolonged consolidation phase. It’s interesting to note that both of these higher-probability counts are ultimately bearish.
We’re focusing this week on discussing the larger picture over the long term, and so our targets reflect this larger timeframe. Hopefully next week there will be enough new data to calculate more useful (and trade-able) targets.
We’re updating our counts to reflect the most recent price action and to present tighter targets and invalidation points.
Weekly Main Count
– Invalidation Point: 1.1300
– Confirmation Point: 1.0525
– Downwards Target: 0.9117 – 0.7768
– Wave number: Intermediate (C)
– Wave structure: Motive
– Wave pattern: Impulse or Ending Diagonal
Weekly Alternate Count
– Invalidation Point: 1.1300 – 1.0525
– Confirmation Point: –
– Downwards Target: 1.0746 – 1.0596
– Wave number: Minute z
– Wave structure: Corrective
– Wave pattern: Zigzag
Please click on the charts below to enlarge.
Main Weekly Wave Count
The bigger picture sees that the euro is moving towards the downside in teal wave x, which is forming a double zigzag labeled maroon waves W, X and Y.
Maroon wave Y is forming a zigzag labeled black waves (A), (B) and (C).
Black wave (A) formed an impulse labeled blue waves 1 through 5.
Main Daily Chart Wave Count
This main count sees that black wave (B) formed a contracting triangle labeled blue waves A through E, retracing exactly 23.6% of black wave (A).
Within it, blue wave D formed a double zigzag labeled pink waves w, x and y, reaching 61.8% the length of blue wave B.
Blue wave E formed a zigzag labeled minute waves a, b and c, retracing nearly 61.8% of blue wave D.
Black wave (C) is likely forming an impulse labeled blue waves 1 through 5.
Within it, blue wave 1 is likely also forming an impulse labeled pink waves i through v.
This count expects the euro to continue moving towards the downside in black wave (C). This is already the default count, and it will be finally confirmed by movement below 1.0525.
At 0.9117 black wave (C) would reach 61.8% the length of black wave (A), then at 0.7768 it would reach 100% of its length.
This wave count is invalidated by movement above 1.1300 as pink wave ii may not move beyond the start of pink wave i.
Alternate Daily Chart Wave Count
This alternate count sees that blue wave D of black wave (B) is still unfolding as a triple zigzag labeled pink waves w through z.
Within it, pink waves w, x1, y, and x2 are complete.
Pink wave z is forming a zigzag labeled green waves (a), (b) and (c).
This count expects the euro to move towards the downside in pink wave z to complete blue wave D.
At 1.0746 pink wave z would reach 78.6% the length of pink wave w, then at 1.0596 it would reach 100% of its length.
This wave count has a low probability because triangle subwaves are almost never known to form as triple zigzags.
This wave count is invalidated by movement above 1.1300 as green wave (b) of this zigzag may not move beyond the start of green wave (a). It is also invalidated by movement below 1.0525 as blue wave D of this contracting triangle may not move beyond the start of blue wave C.