Currently we are trading the EURUSD pair, mainly because this is usually a component of Elliott Wave's Short Term Update, to which we subscribe and receive three times every week.
Recent weeks have seen us somewhat confused with the current wave counts in the EURUSD. We have switched between a couple of alternate counts, and not been convinced of either. Today a couple of things crystallized a new count for us, and we find the ratios and trends to fit this count comfortably.
In recent weeks the volatility and volume traded in this currency pair has decreased significantly. Triangles are usually associated with decreasing volume and volatility.
"A triangle may occur as the final actionary pattern in a corrective combination, although even then it usually precedes the final actionary wave in the pattern of one larger degree than the corrective combination" from Elliott Wave Principle, by Frost and Prechter. With this in mind, we have the below labelled charts.
We are currently at the end of wave 4 in an impulse of 5 waves up. Within wave 4, we have a probable wave count of A, B and completing C down. C is yet to complete. We have marked this chart with a contracting triangle, which would be just before the end of wave C in a downwards direction.
We expect this triangle to reach point E at around 1.4100, then to dip sharply down below 1.3462 in the mid term, and eventually to move lower than 1.2438 to complete C in the long term.
A move above 1.4396, the top of our possible B, would negate this wave count.
We await the next few days movements to see if our count plays out as we expect, or not.
July 9th, 2009 at 9:30 pm
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July 10th, 2009 at 1:17 am
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