EURUSD potential Elliot correction?

[Devon Pendleton]

Hey all, been wrapping my brain around charts for the last few hours and this is what I came up with for a EURUSD projection (attached). Let me know what you think!

Let me start by saying there's a very good chance I may be incorrect in my assumption here. I understand fully that the FX market is an untameable beast and I'm not claiming to know for a fact where the market is headed.

That being said, Ive been immersing myself in the study of Elliot waves for the past few days (Im very new to the forex market, a newbie just a week or two back but I'm completely confident that with enough practice this market can be profitable for me). I've been taking a special interest in the EURUSD mostly due to Felix's analysis, and carefully studying the pairs movement. That led me to looking for long term trending, and lo and behold there's the Elliot wave I've been reading all about!

As you can see on the image, Ive traced what I believe was a clear 1,2,3,4,5 pattern to the most recent low, the 5th leg likely longest due to the latecomers to the trend taking short positions. I believe we can expect an A,B,C correction pattern ending somewhere between 1.3900 and 1.4000. If I'm remembering correctly from studying the "Gartley 222", (ABC correction), the A and C legs will be similar in length which indicates a length of about 50-60 days to finish the correction. Also I noted that the B leg was a .382 retracement of A, which I feel is another strong indicator.

I checked my Stoch as well, set to 14,3,3... and it shows highly oversold conditions at the B lowpoint which lead me to believe we have hit the beginning of the C leg retracement.

 

[Devon Pendleton]

Sorry about the Bolinger bands and the Alligator! I just notice I hadnt turned those off to take the picture. I found the Bill Williams Alligator strategy and Ive been using it to get an idea of relative currency strengths before I enter trades. Im not following all the systems rules at this point (ie crossover of the 3MAs and using the ATR for S/L and T/P), just using it to gauge currencies against each other and look for a pair that may be trending well and then finding support and resistance for the movement from there.

 

[Devon Pendleton]

UPDATE: Check your EURUSD daily charts folks! The C leg I anticipated shot right up over a 3-4 week rally, with nice steep candles as is typical of the final leg of this pattern. Elliot waves are the real deal guys!

Last weeks candle was a very strong reversal signal stuck between the .618 and .720 (still had .768 in the original post but have since corrected) levels of the XA leg, right around the 1.40 price level I had initially expected. I don't expect the bulls to have the strength to push back to .720, I believe we should be seeing the bears out in full force.

Wish I had taken my own advice and gone long, for 600+ pips! I wasn't completely confident in the analysis and decided to sit back and watch this one play out. Expect more Elliot wave analysis from me in the near future however, along with details on my entries.

I will likely start a new thread to track my progress as I attempt to begin to unravel wave action in the forex markets. My ultimate goal is a high level of profitability from a system combining longterm S/R, elliot wave trend recognition, and use of the Ichimoku Kinko Hyo indicator on a weekly timeframe for definitive entry points. I believe that this system will result in highly accurate method for swing trading on longer timeframes. Only time and practice will tell!