EURUSD – Is it doing an about turn for the worse? (Short)
Updated
Background:
Since March 2015 low, the actual wave counts has been difficult as we had very overlapping swings in both directions. In the processed the strong rally from Dec 2016 low started with initial trust that do not show clear 5 minor wave and the pull back was confusing before it commenced a very strong rally define in narrow up trending channel, which many feel is an impulsive wave ie one exhibiting 5 internal waves. Rather to me it appears to be just a “wxy” zigzag.
Overall, the entire range since March 2015 low, looks like an expanded flat which might have been more clearer if we had 3-3-5 structure, but I think we have larger “WXY” with Wave Y completing the recent high, likely termination of Wave 4 in circle on my chart..
If the above is true then:
We have possible (W), (X), (Y) decline from July 2008 high with the (Y) being developed in “ABC” 5-3-5 structure and that we are commencing wave 5 in circle, which should also unfold in 5 minor waves.
Summary of some of the technical:
Some Technical Observations for potential end of rally of Wave 4 in circle :
1. Still in Bearish Channel since July 2008
2. Time Cycles which often show up in H to H, H to L, L to L or L to H pivots and in this case measuring 130 weekly bars, ie from Oct 208 low to April 2011 high is 130 bars and from March 2015 low to recent high also measures 130 bars. Similar time cycle of 93 bars from July 2012 equates to 93 bars from Nov 2015 low to recent high. These 93 and 130 bar cycles have been noted in EURUSD number of times previously hence it has some significance specially when they coincide with other technical.
3. A time symmetry of 39 Bars rally from March 2009 low and present rally from Dec 2016 low to current high synchronising around mid Sept with the time cycle give additional confluence.
4. From both the 2 and 3 above we have time window for possible high to form.
5. Previous support zones in 2010 and 2012, now could act as potential resistance.
6. Potentially false break about declining 200 MA would suggest weakness and continuation of bearish trend.
7. RSI in overbought region and forming potential hidden bearish divergence with lower high in price (from April 2014 compared with recent high) and higher low in RSI.
8. The Wave 4 in circle from March 2015 likely to be expanded flat.
9. Downside target for wave 5 in circle could be retest of 2015 low or make new lower low probably around parity.
Recent COT data suggest relative extreme in large speculators net long EUR Futures to that seen back in April 2011 high (see chart below). Likewise It is possible that DXY might commence equivalent its wave 5 rally.
Conclusion: We can plan bearish trades using our favourite method of entry, exit and trade management for shorting EURUSD. If this 5 wave decline develops then:
1. We might have a major reversal offering longer term bearish trade in EURUSD.
2. A minimum expectation would be a retracement back towards 1.12 -1.11 zone.
3. Initial decline appears to be unfolding in minor 5 waves and upon completion of this a retracement zigzag could offer best risk to reward short entry.
Warning: This is my interpretation of price action using TA approach that I consider helps me most but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views.
For those who appreciate my analysis, select to follow me and the chart for notification of future updates. Indicate you like my analysis by thumbs up, comments and sharing it with others. If you have an alternative idea then, please be constructive and share for all to learn from.
Thank you for taking the time to read my analysis.
DanV
Since March 2015 low, the actual wave counts has been difficult as we had very overlapping swings in both directions. In the processed the strong rally from Dec 2016 low started with initial trust that do not show clear 5 minor wave and the pull back was confusing before it commenced a very strong rally define in narrow up trending channel, which many feel is an impulsive wave ie one exhibiting 5 internal waves. Rather to me it appears to be just a “wxy” zigzag.
Overall, the entire range since March 2015 low, looks like an expanded flat which might have been more clearer if we had 3-3-5 structure, but I think we have larger “WXY” with Wave Y completing the recent high, likely termination of Wave 4 in circle on my chart..
If the above is true then:
We have possible (W), (X), (Y) decline from July 2008 high with the (Y) being developed in “ABC” 5-3-5 structure and that we are commencing wave 5 in circle, which should also unfold in 5 minor waves.
Summary of some of the technical:
Some Technical Observations for potential end of rally of Wave 4 in circle :
1. Still in Bearish Channel since July 2008
2. Time Cycles which often show up in H to H, H to L, L to L or L to H pivots and in this case measuring 130 weekly bars, ie from Oct 208 low to April 2011 high is 130 bars and from March 2015 low to recent high also measures 130 bars. Similar time cycle of 93 bars from July 2012 equates to 93 bars from Nov 2015 low to recent high. These 93 and 130 bar cycles have been noted in EURUSD number of times previously hence it has some significance specially when they coincide with other technical.
3. A time symmetry of 39 Bars rally from March 2009 low and present rally from Dec 2016 low to current high synchronising around mid Sept with the time cycle give additional confluence.
4. From both the 2 and 3 above we have time window for possible high to form.
5. Previous support zones in 2010 and 2012, now could act as potential resistance.
6. Potentially false break about declining 200 MA would suggest weakness and continuation of bearish trend.
7. RSI in overbought region and forming potential hidden bearish divergence with lower high in price (from April 2014 compared with recent high) and higher low in RSI.
8. The Wave 4 in circle from March 2015 likely to be expanded flat.
9. Downside target for wave 5 in circle could be retest of 2015 low or make new lower low probably around parity.
Recent COT data suggest relative extreme in large speculators net long EUR Futures to that seen back in April 2011 high (see chart below). Likewise It is possible that DXY might commence equivalent its wave 5 rally.
Conclusion: We can plan bearish trades using our favourite method of entry, exit and trade management for shorting EURUSD. If this 5 wave decline develops then:
1. We might have a major reversal offering longer term bearish trade in EURUSD.
2. A minimum expectation would be a retracement back towards 1.12 -1.11 zone.
3. Initial decline appears to be unfolding in minor 5 waves and upon completion of this a retracement zigzag could offer best risk to reward short entry.
Warning: This is my interpretation of price action using TA approach that I consider helps me most but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views.
For those who appreciate my analysis, select to follow me and the chart for notification of future updates. Indicate you like my analysis by thumbs up, comments and sharing it with others. If you have an alternative idea then, please be constructive and share for all to learn from.
Thank you for taking the time to read my analysis.
DanV
Note
COT Data:DXY -
Note
Possible 5 wave decline in development Note
So far the EURUSD has progressed nicely and having broken the neckline of a potential larger bearish H&S pattern, has retested it twice and is in early stage of bearish resumption. From wave counts it seem that wave 1 in circle form a low at the neckline and is in wave 5 of (3) of 3 in circle.Also noticeable on 4 hour is that both the EURUSD and EURYEN are under their respective 200 MA which is likley to remain overhead resistance as shown in the chart
Note
EURUSD has bounce higher than originally anticipated and in the the view of this I have reviews the counts and it seem we have possible leading diagonal from September high and the recent bounce looks like abc zigzag and rather sharp retracement for wave 2. Whilst not dismissing the possibility of another minor dive to 1.19, we might very well have the wave 2 high in place and are resuming the bearish trend based on current snapshot view. Here is the chart and will review it as necessary - Note
EURUSD after initially declining in in 5 minor waves in the for of leading diagonal (falling wedge) we retraced in a zigzag which retested the previous high but so far it seem is it has failed to form new high. This has also coincided by new relative extreme in Net Longs by Large Speculators which has not been seen not been seen since 2011 along with high Open Interest (based on COT data) suggest that we might have resumption of the bearish cycle and show gain momentum to the downside - here is the charts
Note
The anticipated follow through to the initial decline did not develop and we have new higher higher high fro the cycle. So in the short term the wave counts did not hold. However don't let that distract you.EURUSD is still completing wave IV. Once this is done,wave V is anticipated. We have Net long by Large Speculators at its most extreme since Mat 2011 with 144,461 as at close of business day on 9th January 2018. This could get even ore extreme but is likley on borrowed time and I will republish this chart as soon as price is little clearer. In the mean time here is the chart with COT data -
If you need to have basic outline of what COT data is and how it can help here is the link to the short video -
Note
Update to the above published today - 
Note
With updated & additional details
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