EURUSD sideways correction still on…
EURUSD is still in a sideways corrective structure in 4H and 1H timeframes. As per last week’s expectation, the market did break to the downside. But there was not enough conviction in the break, nor there was impulsive momentum. On a technical standpoint, the EURUSD has still no directional bias. Hence the sideways correction continues.
Since the market made a corrective move down, there may be another corrective move up in the coming days, before the expected bearish impulse. Understandably so, neither EUR nor GBP has completely returned to normal market conditions, after the Brexit. It seems we will hear the term Brexit for many more weeks and months to come.
So the wave count?
Below is my preferred Elliott wave count for EURUSD.
Expectation here is a similar move to that of the B wave also marked with a red arrow. This Elliottt wave count is useful to get a long term perspective of the market. However for intraday trading purposes it may have little to no value. So lets go further down to a lower timeframe.
Its difficult to analyze or trade when the market is in such a mess. No clear patterns or structure. According to my experience, this is more likely to be a WXY correction with a Flat ABC as the first component. Possible ABC flat is the W wave of the WXY differentiated with a yellow background in the above image.
You may wonder, why is it a W and not the end of correction? Good question. The reason is the down-move so far from the end of C wave is not impulsive enough for a 3rd wave. Furthermore the overall move of last week clearly demonstrates an ABC ZigZag. So its sensible to label it as an X wave at least for now. When there is no clear count of wave count, its better to wait for the chart to resolve itself – as recommended in the wave principle.
But if I am to pick a direction for next week, I will expect a “corrective” bullish move. For trading eurusd, I would await another corrective pattern (possibly a triangle) as the last component of the WXY. Then take an entry short, if the market presents an opportunity to enter. But this bearish impulse could take a bit longer to materialize, contrary to our expectation.
Note: When I use the words “Expectation” or “Expect” for a market or currency to decline in value, it does not mean that I wish that to happen. Its merely a notion of the evidence presented by the technical analysis. I had to mention this, because I had a reader email me asking why I wish bad things for EUR. The truth is I don’t. Just that its the forecast according to the Elliott wave principle.