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We are providing technical analyzes for the financial markets and how they behave based on the Elliott Wave Principle. The Elliott Wave Principle gives you a method for identifying at what points a market is most likely to turn. And that, in turn, gives you guidance as to where you might enter... More
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  • EURUSD At Temporary Resistance; Be Aware Of Reversal 0 comments
    Jun 13, 2013 3:35 AM

    USD extended its losses since yesterday when the US stock market turned sharply lower with the Dow Jones Industrial Average down three days in a row for the first time this year. Correlation between the markets remains unchanged; USDJPY and other XXX/JPY pairs are tracking stock market, while EURUSD and other XXX/USD pairs are moving in opposite direction. As such, EURUSD is at its highs, now testing 1.3380 area.

    From a technical perspective, we see all XXX/USD pairs in fifth waves of 3 and we know that after every five waves trend will change, even if just temporary. Below I have a basic structure of a five wave rally on which I marked a current position on EURUSD . I see it at the end of wave three so pull-back is expected.

    Elliott Wave: Basic five wave rally

    (click to enlarge)

    EURUSD 4h

    (click to enlarge)

    On charts above I see it at the end of wave three so pull-back is expected. So what this tells us? Well, I think a lot; first if you are long you could be out of the market here, or if you want to get in and ride the EURUSD trend then it's probably better to wait on correction. Then it also tells you a lot about the other markets. If correlations will remain as they are and if EURUSD will turn lower from 1.3380/1.3400 resistance then stocks will probably find a support that will cause some rally on xxx/JPY pairs as well.

    Market correlation 1h

    (click to enlarge)

    Bottom line; be aware of a trend reversal in the near-term, don't chase here!

    Trade well,

    Agree

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