Jan 052011
 

Earlier today, I had suggested that there is a good chance for the Euro to recover from within the 1.3180/00 window back to above 1.3300. I had personally gone long just above the 1.3200 lvl and got stopped out. (No matter how confident one is with a view, a stop MUST be placed in the market because there are so many things that could go wrong). Very strong data from the US triggered lots of selling of the Euro, and we have already reached the 138.2% projection for the extending 5th wave. If we are lucky, the Euro will ease further towards 1.3100, giving us the chance to see if a long position can be taken around there tomorrow. Remember, extending fifth waves can make the trader lots of money, so long as he can spot the end of the extension in real time. My buy order (and the stop loss) was done while I was driving back home. Such chances are to be taken for smaller position sizes only because you are placing a blind order in anticipation of a normal move.
Also rememeber that extending 5th waves will be doubly retraced, which means even if we miss the first recovery from the bottom, we will usually get a 2nd chance to get on board! Let us see tomorrow.

  2 Responses to “EUR/USD update”

  1. What so you mean doubly retraced? The A retraces the extended 5th followed by a B that heads back toward the beginning of A followed by a C that equals or exceeds A?

    Pete

    • Pete, thats correct. So if this were really an extended 5th (remember all wave counting is conjecture before the move is completed), then allow for a sharp initial rally. Then wait for a deep pull back as the B wave that will approach (and occasionally exceed the bottom of wave 5), and then a huge rally back to the 2nd wave of the 5th. When we pick bottoms, there is always a risk of losing. But with an extended 5th, one can take chances, always keeping a tight stop, because we want to catch the move anyway, and need to preserve the capital.

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