Oct 272011
 

This post explains the importance of applying the Elliott Wave framework on minor waves so you can spot an error quickly.

A few days ago, one of my friends sent me the analysis of the EURUSD that appeared on WaveTimes on 13 Oct 2011 and suggested that perhaps the single currency was headed in the direction suggested there. But the ongoing uncertainties made me skeptical and I shared my slight bias for a dip to 1.3585 first. The latest rally has once again proved that (a) no wave count is a ‘given’ until the move is over (b) just because someone has more experience with Elliott Waves does not mean he is going to be correct and (c) it really does not matter what your wave count is so long as you can take corrective action as the market unfolds.

You need to have a framework to base your trading decisions. I had given you a framework on 13 Oct, but pointed out the risks of that going wrong with subsequent updates. One could have made money in the short term using all the charts presented, but what was important is the level you chose to enter. If you had jumped in the middle of the consolidation, your stop would have been far. The key to timing a trade is your ability to look at the smaller time frames and establish wave counts for the minor waves. The closer you get to the action, the sooner you will know when one of your ‘rules’ get violated, informing you that you are wrong. The framework that you need to have is explained in detail in my book “Five waves…”. Revisit that book often, so you can apply it to every trade that you put on. Good luck.

  6 Responses to “Elliott Wave update on EURUSD”

  1. Ramki,

    I have been following similar Counts on GBPUSD & AUDUSD- which invalidated earlier then EUR- I was actually looking for this chart- I had recalled it well as the 38Fib retace from wave2 should have been the flag we were in a large wave 4- PA was certainly wave 4 type– meant to confuse as both distribution and accumulation could be seen– Again another “flag” I disregarded– that and the ridiculous stop hunt on USDCAD yesterday. Thanks for posting!

  2. Hello Sir,
    You wrote : (a) no wave count is a ‘given’ until the move is over .
    My doubt is on similar lines:
    I have one lingering thought regarding the Wave theory , we can only be sure ,only after the Event has played out ,which can be the case without the Wave Theory also !!
    I am not against Wave theory(In fact I am a Follower) , but its a lingering thought.
    Also , whatever be the Euro zone is going through right Now , I think Euro has a long term(3 years) Target of 1.75 and 1.95. It is not just a prediction , Euro has broken out of a Triangle in the Long Term Charts (10 year) and it has revisited the Triangle in the last Fall from 1.49 to 1.31 . The height of the Triangle is 0.4 and it should be added to the Break Out level, which is 1.35. For this trade the StopLoss is 1.20.Chart Ref :
    http://www.google.com/finance?q=EURUSD
    I know that there will be hardly any trader who looks to trade such Long Term calls,still I wanted your opinion on this call.
    Regards
    Sachin A

    • Hello Sachin,

      You wrote : no wave count is a ‘given’ until the move is over . My doubt is on similar lines:I have one lingering thought regarding the Wave theory , we can only be sure ,only after the Event has played out ,which can be the case without the Wave Theory also !!

      Have you read my book “Five Waves to Financial Freedom”? That teaches you ‘How to use elliott waves’
      You don’t need to be having a correct wave count to make money. But you should know the rules and guidelines of counting. Even if your wave count is proved wrong later on, you can make money until the time it is proved wrong.
      You then wrote I think Euro has a long term(3 years) Target of 1.75 and 1.95.

      You could be right, Sachin. I have been wrong about a move that didn’t last one week! Trouble is, we all have to operate with a stop loss, and no amount of being right is going to help if my stop loss is done tomorrow.

      Thanks for writing.

  3. Is there any collarations between eur and gold now?

  4. We almost reached 3585 today in EURUSD. Is this the dip you were talking about in your post from Oct 27 ? An update on EURUSD would be highly appreciated.
    Thanks in advance!

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