Turns out it was a good thing that we changed our main count yesterday, just in time to catch the violent (and abrupt) rally that happened today.
It’s worth reiterating that this rally, despite its clear strength, is still perfectly in line with our long-term bearish view. It’s easy to look at the hourly chart and see this recent movement as an uptrend, but once you switch to the daily chart, you begin to realize that the market is actually facing some serious resistance at different degrees.
Please note that in order to make full sense of today’s analysis, keep in mind that the daily chart is the one that defines the trend (and the main count), whereas the hourly chart essentially looks at the correction within that trend.
We’re updating our counts to reflect the most recent price action and to present tighter targets and invalidation points.
By moving below 1.0445 then 1.0372, EURUSD will be expected to find support between 1.0131 and 0.9809, while remaining below 1.0660. Any break above 1.0660 is expected to be short-lived, and is highly unlikely to exceed 1.0874.
Hourly Main Count
– Invalidation Point: 1.0660
– Confirmation Point: 1.0445 – 1.0372
– Downwards Target: 1.0131 – 0.9809
– Wave number: Minute iii
– Wave structure: Motive
– Wave pattern: Impulse
Elliott Wave chart analysis for the EURUSD for 29th December, 2016. Please click on the charts below to enlarge.
Main Daily Wave Count
The bigger picture sees that black wave (C) is likely forming an impulse labeled blue waves 1 through 5.
Within it, blue wave 2 formed a double combination labeled pink waves w, x and y, retracing nearly 50% of blue wave 1.
Blue wave 3 is forming an impulse labeled pink waves i through v.
This count expects the euro to continue moving towards the downside in blue wave 3. This will be largely confirmed by movement below 1.0499, and it will be finally confirmed by movement below 1.0352.
At 1.0092 blue wave 3 would reach 100% the length of blue wave 1, then at 0.9609 it would reach 161.8% of its length.
This wave count is invalidated by movement above 1.0874 as pink wave ii may not move beyond the start of pink wave i.
Main Hourly Wave Count
This main count sees that pink wave ii formed a zigzag labeled green waves (a), (b) and (c), retracing nearly 61.8% of pink wave i.
Within it, green wave (a) formed an impulse labeled orange waves i through v.
Green wave (b) formed a complex double zigzag labeled orange waves w, x and y.
Green wave (c) formed an impulse labeled orange waves i through v, reaching nearly twice the length of green wave (a), and it’s most likely complete.
Pink wave iii is forming an impulse labeled green waves (i) through (v).
This count expects the euro to move towards the downside in pink wave iii. This will be largely confirmed by movement below 1.0445, and it will be finally confirmed by movement below 1.0372.
At 1.0131 pink wave iii would reach 100% the length of pink wave i, then at 0.9809 it would reach 161.8% of its length.
This wave count is invalidated by movement above 1.0660 as green wave (ii) may not move beyond the start of green wave (i).
Not that, even if the market breaks above 1.0660, the main count on the daily chart remains valid unless the market breaks above 1.0874.
Alternate Daily Wave Count
This alternate daily count sees that blue wave 2 is forming an expanded flat labeled pink waves a, b and c.
Within it, pink wave c is forming an impulse labeled green waves (i) through (v).
This count expects the euro to continue moving towards the upside in green wave (v) of pink wave c to complete blue wave 2.
At 1.0709 pink wave c would reach 100% the length of pink wave a, then at 1.0929 it would reach 161.8% of its length.
This wave count is invalidated by movement above 1.1300 as blue wave 2 may not move beyond the start of blue wave 1. It’s also invalidated by movement below 1.0499 as green wave (v) of this impulse may not enter the price territory of green wave (i).