Oct 122011
 

It is almost a full month since I presented you some analysis on the EURUSD. As discussed last time, Elliott Wave Analysis is a dynamic approach to the market. Your goal should not be to showcase that you can anticipate price patterns and targets correctly. Rather, it should be to learn the techniques and apply it to make money.

I notice that some readers keep posting requests for views on where the market will go next. In its current avatar, WaveTimes is not offering any trading advice. The main reason for the existence of this blog is to stay connected with market, and to share my experiences with those who seek to learn. Some of my predictions could look audacious at the time of writing, but be aware that as a trader who practices the theory, I can change my mind any time. You too should give yourself that flexibility. When I spend an hour on a chart, and come up with a plan, it is a plan that I will follow until proved wrong. After reading my analysis, if you think you agree with what is being said, you should put in place levels where you know that something is going wrong. I may not be updating this blog in real time for you!!

Let us look at the progression of the Euro from its recent lows, and see if there are any reinforcing lessons for you. (As I have said elsewhere, my book “Five Waves to Financial Freedom” is a living book because this blog is an extension of that book. You may learn a lot just by going through the numerous examples here, or you may choose to have that book as your main framework and use this blog as a supplement).

  7 Responses to “Elliott Wave Analysis of EURUSD”

  1. Hello, Thank you for the opportunity to read your book! It made Elliot Waves more clear to navigate. Regarding your recent EUR/USD post, I think we have just finished 3rd red at exactly 2.618! and are in the final 5 wave already. Just my 3 cents. Thank you.

  2. About my yesterday’s comment, I think 3rd red might indeed still be in progress (Oct. 14th), Mr. Ramki explained why we might have extended 5th green, so after analyzing the chart closely again, I noticed that recent retracement could be indeed 4th green within 3rd red (not 4th red as in my previous comment) as it did not break Elliot Wave rule and the retracement finished just couple pips away from 1st green wave territory and the 5th green is still extending to complete 3rd red. Both scenarios are valid, either 3rd red has already finished at 2.618 extension or not and we are observing 5th green within 3rd red extending as Mr. Ramki noted. It will be clear soon. Most important lesson is that we observe closely what happens at those extension levels that we expect wave to end and then look for first 5 small waves in opposite direction to confirm the end of the move and then wait for the retracement to jump on the boat with low risk. Thank you again for this great learning experience.

  3. Ramki,

    I own your book– it’s been a great supplement and the information is more relevant then looking at charts from the 1920′s…lol.. Targets is something I have always struggled with…

    I already came up with similar EU targets– However my count both down and up are slightly different- not different enough to impact the overall and still fitting all of the “rules” of EW. It is reassurring to see a similar count and targets because so many traders seem to adjust their counts to their biases and not the market.

    I find your expanded flat B wave down interesting ( I had considered it but disregarded when it surpassed 1.618 of your A. Perhaps the market needed to extend to the 1.618 of the July 12 Low May 4 high- before correcting?
    It would explain the 5 waves up pattern move we have seen since the Oct 4 correction more logically – it has had more strength and surpassed traditional targets then an A wave of a A/B/C flat.

    • Jeff,
      Thanks for your comments. As you would have probably figured out by now, I try to use Elliott Wave Analysis the way it is meant to be, that is to use it as a broad road map for where the market might head next. Labels are assigned to faciliate this end. Once a significant portion of the anticipated move is covered, I will have no regret in abandoning an old count and look for a new, more useful, current one!

      • Helo Yan, It is perfectly possible for several wave counts to be valid when a move is still unfolding. No one can truthfully claim that either one or the other count is correct until AFTER the move is over. (Of course, a more experienced analyst could spot a count with a flaw eg when one of the rules of EWP is being violated). But if your count is following all the rules and guidelines, then your count is as good as anyone else’s. However, if you are tradig your count, you should exit when the PRICE tells you that your count is wrong. If there is one key lesson you have learned from WaveTimes, it should be this.

  4. Curious why in your illustration of a “possible” path red 4 doesn’t pull back to the 4th wave of the next lower degree which is iv?

  5. Hi Jim, at this time, it’s all imagination. If the red wave 3 that finished around 1.39 is indeed a third wave, it will be an extended third. A 23.6% correction will bring it down just to to black wave iv. I think if it comes down to the next wave iv level som of the current bullish propensity will be lost, and the upside target will be all the more difficult to achieve.

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