Price action on EURUSD has
been a real mess lately. Pair however lost around 300 pips from March high but
it was not easy to take any action within this downtrend because of some very
overlapping price action, and also because bigger trend is still up.
Pair fell down to 1.3671
following the NFP report on Friday, where prices could be forming a bottom now,
especially if your primary tool for analyzing the markets is the Elliott Wave
Principle. From that perspective we can see a double zigzag from 1.3966 high
which is a corrective pattern. In other words, it’s a downward retracement
within larger uptrend, and once this move is complete you would expect that
decline will be fully retracement.
EURUSD 4hElliott Wave Analysis
Now the question is how to
identify end of the pattern. Well, always when you see a five wave move from
the low or high you should know that something is changing on that particular
market. So in our example of EURUSD we will check the wave structure on lower,
hourly chart.
EURUSD 1h Elliott Wave Analysis
As you can see pair has
turned up clearly in five waves in impulsive fashion, which means that bulls
are again trying to become stronger and that trend is changing from bearish to
bullish mode. Even if market changes a direction just temporary you would
expect more gains after wave (b) / (ii) pullback. So from a trading perspective
there is room for a trade to the upside.
Based on current market
conditions and structure trade could be as follows;
Buy 1/2 of your position
size at market
Buy limit for 1/2 of your
position size at 1.3720
Stop loss is 1.3670
Target is 1.3870
Trade well!
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