The market has been in a sideways consolidation (with a slight downwards bias) over the past week.
This fits nicely with my current main view, which sees the euro rallying in a minor-degree impulsive, where the past week saw its fourth-wave correction. This is very useful because now I can present an objective confirmation point, as well as tighter targets.
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: 1.1269
– Upwards Target: 1.1328 – 1.1360
– 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.
This count expects the euro to move a bit further towards the upside in pink wave v to complete blue wave C, and therefore black wave (C). This will be confirmed by movement above 1.1269.
At 1.1328 black wave (C) would retrace 78.6% of black wave (B), then at 1.1360 blue wave C would reach 161.8% the length of blue wave A.
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.