Eur/Usd


Hourly chart:

 

Current wave: Wave 'e' of the large 'B' wave triangle is concluding.

Outlook: Lower in wave 'C' green, awaiting a shorting opportunity off the wave 'B' green, high.

Picking market lows and highs is a damned annoying business, and you simply cannot avoid looking foolish to the innocent bystander!

Because,
you may be correct in the overall thesis,
(as an example, I think the dollar is going to have another leg down soon.)

but
every entry point you take has a very high probability of being stopped out simply because we retail traders don't have deep pockets to suffer a 150 point swing against the position like the big boys do.

so we got to keep the stops tight, and live to fight another day, continuously.

and that's where patience, persistence and constant analysis pay off in the end.
If I am not willing to do these necessary things
then I better quit right now!

that's todays pep talk, now down to business!

todays EurUsd trade took out yesterdays low, but it also took out yesterdays high!

so, how do you place a trade in a market that fights you like that!

no matter what way you slice the price action it all points to one theme,
downside momentum is stalling and the market is building for a rally.

I have moved the wave 'iv' grey label to the low of the day.
the price still managed to stay above the invalidation line although it came dangerously close.

there is a problem with the operating wave count.
It comes in the form of proportionality between the waves labelled in grey.

this is not a hard and fast rule, but more of an informed opinion!

in general the internal waves in any structure should be proportional in size.
So, wave 'iv' in this case, has gone on for too long and gone too deep and is far outside the normal range for wave proportionality.
but, it has not yet broken the invalidation line at 11106.

I have shown the alternate wave count on the hourly chart,
interestingly both wave counts call for a rally,
the alternate count calls for a rally in wave 2 blue, with a possible target in the 11300 area.
so we have that on our side.

the ten minute chart shows todays 80 point rally,
It took out yesterdays high, which points to a possible shift in the momentum to the upside.

The MACD has a definite trend of divergence from the price action.

all these signs are pointing to the coming direction change, the trick is getting on at the right time.

for tomorrow
again, watch the low of the day, to see if we get some form of a base in place.
the medium term target is in the 11450 region so I am less interested in getting involved in a trade here.
but if the right opportunity comes, I will consider it.

Takeaway's:
  •  alternative wave count looking more likely labelled in blue
  •  both alternative and current wave count call for a rally soon.
  •  11106 low should remain intact for the operating wave count to stay valid.

 

Until tomorrow,
Enda.