A Bird's Eye View of the EUR/USD

While it seems that the EUR/USD makes a new all-time high every day, a longer term view shows that it is extremely close to a top.

The ascent from 1.1640 to 1.2976 was Wave1 (with a truncated Wave-v). I am making this assumption because Wave-v subdivided into 5-waves and Wave-v was roughly 38.2% of the entire wave (a common ratio for impulse waves).

The Wave2 correction followed, and stopped near the previous Wave-iv low.

Wave3 has been underway since the 1.2483 low, and has formed as a very powerful extended 3rd wave. Wave-i of Wave3 formed as a leading diagonal (this count is validated by the fact that each up-leg in the diagonal subdivided in 5-waves, while each down-leg was in 3-waves); Wave-ii was a sharp ABC correction; Wave-iii was a typical extended third wave; and Wave-iv was a triangle. We are now in Wave-v.

There are three indicators that suggest we are within 50pips of a top:
  • 1) price has breached the top of the Elliot wave channel in a typical final throwover
  • 2) Wave-v of Wave3 would equal 38.2% of Wave3's length at 1.5646
  • 3) daily RSI(14) is at it's highest level in the past 4 years
We should soon have a very sharp correction on the EUR/USD, perhaps as low as 1.4438, where Wave-iv ended.

No comments: