“Morning folks. Just back in the office after a five-day holiday and see that already my post on the Euro from home has gone for a toss. However, a careful reading of the elliott wave analysis posted on 12 Spetember would have alerted traders that something was going terribly wrong. That section is reproduced for your convenience:
“In order for us to conclude that the down move that has just started is the beginning of the next big move, we need to see accelerated selling. (This being a third wave should demonstrate the personality of that wave. Else traders should quickly exit short positions and wait for the correction to be completed on the upside)”
You see, in order to use wave analysis for profitable trading of stocks or currencies, you need to understand wave personalities. If you are looking for a 3rd wave to the downside, then we should get an acceleration in that direction. What will you do if the market opens with a GAP on the upside as happened on Monday? (The closing level on Friday was 1.2678, but the first price in Wellington was above 1.2710, if my charts are correct). You will naturally conclude that the correction was not complete at 1.2920.
So I urge readers to use this post and my Elliott wave analysis of Euro posted 12 September as a learning experience.
Coming back to where the Euro can go in the immediate future, it is possible to get a double zig-zag correction back to 1.3045. There are a couple of intermediary levels at 1.2912 and 1.2945/50 that could see some activity, but I will refrain from selling until evidence of a top is seen, or until we get to 1.3045. A complex correction can take all shapes and sizes and there is no point trying to anticipate where and how soon it will end. Even when I sell, I will use a close stop. Let me reiterate once again that in order to be comfortable that we will see 1.2175 in the coming days, we need to see the selling gain pace with the passage of time. Any slow downmove is not in keeping with this view. Good luck going forward.