Market Interpretation
Market Condition: Retracement
Bias: Sell EUR/USD
Entry: 1.1250 – 1.1350
Stop Loss: 1.1460
First Target: 1.0970 where this anticipated wave lower would equal in length the Sept 18-22 wave lower
Second Target: 1.0833 where this anticipated wave lower would equal in length the Aug 24-Sept 3 wave lower
Third Target: Open – we’ll reassess if we get close to 1.05
Risk Management: Move the stop loss to 1.1325 on a move below 1.1210
(Click on the chart to zoom in; after zooming in, press the play button towards the right to set the market in motion)
It appears the jump higher this afternoon on the release of the Fed Minutes was enough to clear out the chop and slop higher for EUR/USD. If so, the EURUSD is ripe for an aggressive move lower that likely tests 1.1000 and possibly lower levels.
An aggressive move is anticipated based on the Elliott Wave model projecting a possible continuation of the wave 3. Third waves tend to be the strongest and longest. Therefore, we look for this leg to have similar proportion in length to the previous down moves of late August and late September.
Though we never know for sure if the move lower will transpire as a third wave or if prices continue to elevate higher. If higher prices do ensue, the next level of wave relationships show up in the 1.1380-90 area.
From a timing perspective, Kristian Kerr warned of a budding negative bias in the pair as the 1x2 Gann angle was tested this week. See his piece below.
Suggested Reading:
Price & Time: EUR/USD – Subtle Change in Behavior?
Gold Price Outlook is Favorable According to Elliott Wave Theory
To receive additional picks or articles on using Elliott Wave Theory, join Jeremy’s distribution list.
