Since my last weekly analysis of the euro and its ongoing struggle with the U.S. dollar, the market has seen significant appreciation in price as well as interesting developments in its pattern.
From a wave perspective, it’s very difficult to see the upwards movement from 1.0340, despite its apparent strength, as any type of motive wave. In fact, the same remark goes for the entire move since March 2015.
This leads me to believe that perhaps the triangle that started from 1.0462 is not over yet. If anything, it seems to be right in its middle stage. This is not the only possible scenario, but I find it to be the one that best fits all this seemingly chaotic bouncing into a recognizable, structured pattern.
If this is correct, then we can expect several more months of the same confusion and sudden spikes of volatility that we’ve been seeing for the past couple of years. Still, chances are this week and the one that follows will see another small rally to complete the middle stage of this triangle.
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: 1.1023
– Confirmation Point: 1.1300
– Upwards Target: 1.1393 – 1.1422
– Wave number: Minor 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 sideways in primary wave B, which is forming a running triangle labeled black waves (A) through (E).
Main Daily Chart Wave Count
This count sees that black wave (C) is most likely forming a zigzag labeled blue waves A, B and C.
Blue wave C is forming an impulse labeled pink waves i through v.
So far pink wave iii has just exceeded 100% the length of pink wave i.
This count expects the euro ultimately to move a bit further towards the upside in pink waves iii, iv and v to complete blue wave C, and therefore black wave (C). This will be confirmed by movement above 1.1300.
At 1.1393 blue wave C would reach 161.8% the length of blue wave A, then at 1.1422 black wave (C) would retrace 78.6% of black wave (B).
This wave count is invalidated by movement below 1.1023 as pink wave iv of this impulse may not enter the price territory of pink wave i.