As expected the euro moved towards the upside, reached our target and exceeded it by 9 pips, and then immediately reversed downwards for 125 pips.
Given that we were waiting for wave 3 to form a top, this strong decline looks like convincing evidence that wave 4 is now in effect. Fourth wave are the most difficult to count and anticipate, as they can unfold into any corrective form, but we have a couple of clues that may prove helpful in limiting the possibilities.
Synopsis: EUR/USD is expected to move towards the downside in a corrective manner to find support between 1.1621 and 1.1573, while it remains ideally (but not necessarily) below 1.1777.
Hourly Main Count
– Invalidation Point: 1.1777
– Confirmation Point: –
– Downwards Target: 1.1621 – 1.1573
– Wave number: Minute iv
– Wave structure: Corrective
– Wave pattern: Zigzag, Flat, or Triangle
Elliott Wave chart analysis for the EURUSD for 27th July, 2017. Please click on the charts below to enlarge.
Main Daily Wave Count
The bigger picture sees that the euro is moving sideways in maroon wave B, which is forming a flat labeled black waves (A), (B) and (C).
Black wave (C) is forming an impulse labeled blue waves 1 through 5.
Blue wave 5 is forming an impulse labeled pink waves i through v.
This count expects the euro to continue moving towards the upside in blue wave 5.
At 1.1811 maroon wave B would retrace 38.2% of maroon wave A, then at 1.1909 blue wave 5 would reach 161.8% the length of blue wave 1.
This wave count is invalidated by movement below 1.1445 as pink wave iv of this impulse may not enter the price territory of pink wave i.
Main Hourly Wave Count
This main hourly count sees that pink wave iii formed an impulse labeled green waves (i) through (v).
Green wave (v) formed an impulse labeled orange waves i through v. Given that the market has now come into the territory of orange wave i, it’s extremely likely that green wave (v) is complete.
This count expects the euro to be moving towards the downside in pink wave iv.
Since pink wave ii formed a shallow and complex running correction, the Guideline of Alternation suggests that pink wave iv will be at least somewhat deep and impulsive — a description that best fits as a zigzag.
At 1.1621 pink wave iv would retrace 38.2% of pink wave iii, then at 1.1573 it would retrace 50% of its length.
Since pink wave iv is not yet confirmed to be a zigzag, no invalidation point may be placed at its origin. But the market should at least find strong resistance at 1.1777.