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Euro Not Finished Yet

Looking for: A short reversal off 1.5000 that finds support at 1.4900. Then looking for a long reversal to challenge 1.5200. Two trades; near-term short play, that leads to a mid-term long play.


The U.S. Dollar is lower against the majors at the start of a new week, driven by a higher global equity and commodity market. Gold is trading at all time highs above 1160 area, while oil gained more than two dollars since Friday 76.70 low but is looking the least bullish of the three asset classes.

Since the Friday close, S&P futures have moved 20 points higher after a bounce from the 1082 region, which pulled the U.S. dollar index back to the significant 75.00 support zone that has been tested several times over the past two weeks.

All of these moves within the current global market signal that it is not the right time to be long U.S.  dollar yet, but that it also is not the time to add to new positions. If the short-dollar train rushed past your station and you were on the wrong platform, do not try to jump on. The short-dollar move was dramatic, and fueled by Nikkei futures trade that took a 2% slice out of the closed (bank holiday) cash market. 

TheLFB Elliott Wave team have reviewed the one hour price action of the most widely traded pair, Eur/Usd, which is confirming a short U.S. dollar view, at least at the initial part of this week, but is also running into a huge resistance area around 1.5000.

TheLFB Charting: Eur/Usd 1 Hour Elliott Wave view

On the one hour Eur/Usd chart above, the market has completed a Short corrective three wave move, labeled as black waves A), triangle B), and C). The bottom of that move was found on Friday at 1.4800, where Euro was bought again against the U.S. currency.

The corrections are always made against the larger trend, so traders may see an up-trend continuation over the coming sessions and days, if the 1.4800 bottom holds. This up-trend continuation should unfold with an impulse structure labeled as a blue waves i, ii, iii, iv and v.

Currently, the blue wave iii is searching for a top around the current levels at 1.5000, from where traders may see a corrective pull-back in wave iv, before the dollar bearish trend shown at the start of the week can continue.

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