EURUSD – what next? is the question of most traders these days. No offense, but I felt sorry for all the fundamental traders. All that buzz of NFP – a high impact monthly news event, and you only get a measly 80 pip move; even that, as a correction of the main weekly move? Sorry guys, I had to pull that up, just to annoy my fundamental buddies. Ok, back to the topic, so we got the break to the upside on the H4 timeframe. Is it the start of a larger impulsive move?
As you can see, EURUSD is still in a very large corrective structure. This structure could develop into two possible patterns – ABC or ABCDE triangle. If you are new to Elliott wave triangles read this post about a contracting triangle forecast.
EURUSD possibility of ABC
While its possible that EURUSD is in the C wave of a larger ABC of higher degree, its low probability. When I say low probability, I don’t just assume the probability. When markets create back and forth impulsive moves in a corrective structure, there is high probability that it’s a triangle pattern. Besides the personality of the B wave (of the hypothetical ABC) is not so convincing to be a B wave of an ABC structure.
Resources: Learn more about Elliott wave counting and personality of waves.
Do you see big impulsive moves back and forth in the structure? I’ll let you be the judge. The main reason to eliminate the possibility of an ABC pattern is not just personality of waves. If you take a close look at the hypothetical A wave, you see that it consists of overlapping 5 waves (12345 – overlapping 5 wave structure commonly found in triangles.)
EURUSD Triangle forecast
My vote is for the triangle to play out. Remember last week push of EURUSD may or may not have marked the end of the C wave of the triangle. It’s a good idea to be cautious at this point, especially if you are long biased. On the other hand the price is right around the 61.8% fib retracement of the B wave. So there is a good chance for a swift reversal, marking the start of the D wave.
That’s EURUSD sorted, at least for next couple of months. All you have to do is find the impulses within this huge correction. When this correction is complete, one way or the other; make sure you watch out for the next BIG impulse to come. Do you agree with this forecast? Give me a shout in the comments.