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Sunday, November 23, 2014

Elliott Wave Analysis of EURUSD

Do you remember the cheer leading for the EURUSD back in April - May 2014? All I read was EURUSD is going to 150 160, sell the US$ etc .

Back then I was looking for a major peak for EURUSD I posted a couple of charts on Stocktwits.

See here: http://charts.stocktwits.com/production/original_22387342.PNG?1398488058

Sentiment was really bearish for the US$, but the complete opposite pattern was also setting up for the US$ (aka DX). Its not easy looking to fade the majority at major turns, but this is where Elliotticians have a distinct advantage.

Fast forward to today, we now have the same setup for the US$, sentiment has completely reversed against the EURUSD, In May 2014 everyone loved EURUSD, but now everyone hates it.Yet we are actually looking for a major low for EURUSD, we feel there is a high reward and once again we find ourselves looking to fade the crowd, just like we did at the May 2014 highs.

There is a strong reward trade setting up for those that are looking to fade the majority.

A 5 wave advance appears to be close to ending on the DX, so subsequently we see a 5 wave looking decline on EURUSD, we can clearly see a large RSI divergence also setting up for both markets.

If we are correct (we think we are) then expect a larger reversal, a turn that the majority will miss, just like they missed in May 2014.

Target is 132-134, that's going to be a great trade for those on the right side, another way to trade the move is to sell USDCHF, either way we think a larger move lower is setting in for the US$

So the trade will be to sell DX (aka USD) and USDCHF, buy EURUSD and GOLD