EURUSD: The Euro New Year’s Analysis

The euro had a relatively bullish week that nonetheless ended on a dangerously bearish note — one that may set the tone for the entire year in 2017.

But before we get to that, I’d like to take this opportunity to wish you a fantastic new year. May all of your plans, wishes and goals come true!

My general view for 2017 has been simple and consistent: the wave pattern strongly suggests that the market is about to experience a monstrous decline, as it heads into the center point of a long-term downtrend that should drag price even below parity within a relatively short period of time.

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: 1.0874
– Confirmation Point: 1.0352
– Downwards Target: 1.0131 – 0.9809
– Wave number: Minute iii
– Wave structure: Motive
– Wave pattern: Impulse

Weekly Alternate Count
– Invalidation Point: 1.1300 – 1.0499
– Confirmation Point: –
– Upwards Target: 1.0709 – 1.0929
– Wave number: Minute c
– Wave structure: Motive
– Wave pattern: Impulse

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.

Black wave (B) formed a contracting triangle labeled blue waves A through E, retracing 23.6% of black wave (A).

Black wave (C) is most likely forming an impulse labeled blue waves 1 through 5.

Main Daily Chart Wave Count

This main count sees blue wave 1 formed a very strong impulse of almost 800 pips.

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.

Within it, pink wave ii formed a zigzag labeled green waves (a), (b) and (c), retracing nearly 61.8% of pink wave i.

Green wave (c) of pink wave ii ended with a very clear “shooting star” candlestick bar, which is typically a very reliable bearish signal.

This count expects the euro to resume moving towards the downside in pink wave iii. This will be highly confirmed by movement below 1.0352.

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 1.0874 as pink wave ii may not move beyond the start of pink wave i. Once price moves below our confirmation point, we may lower the invalidation point to the end of pink wave ii, which currently stands at 1.0654.

Alternate Daily Chart 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 seems most likely to be forming an impulse labeled green waves (i) through (v).

This count expects the euro to continue moving towards the upside in 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 (iv) of this impulse may not enter the price territory of green wave (i).

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