This morning EURO DOLLAR opened at the $1.123 where it’s still trading now. the pair has carved out an outside day so with an intraday high of $1.125 and an intraday low of $1.120. Currently, EUR/USD is up by 0.3.56% compared to its low of $1.0834 on July 6th. The recent price action over the past two trading days has been a correction to this bulish rally. Momentum indicators for both the daily and weekly charts are showing strong positive momentum for EURO DOLLAR. In the short term, the daily Average Directional Index (ADX) is trending upwards at 26.81, with the positive directional indicator (+Di) at 35.49, well above the negative directional indicator (-Di) at 11.08. The Moving Average Convergence Divergence (MACD) indicator is also bullish, with the MACD line at 0.0053 and the Signal line diverging from it at 0.0087.
EUR/USD DAILY ADX(14)
EUR/USD weekly Average Directional Index (ADX) with a period of 14 is currently registering at 24.52, indicating strengthening momentum. The positive directional indicator (+Di) has risen to 30.35, while the negative directional indicator (-Di) has decreased to 12.73. These readings suggest a classic wave 3 momentum pattern for EUR/USD, indicating a continuation of the upward move. It is expected that the price will continue to rise towards the Fibonacci 3vs1 targets mentioned below.
EUR/USD WEEKLY ADX(14)
EUR/USD DAILY BAR STOCKCHARTS.COM
EURO DOLLAR LONG TERM ELLIOTT WAVE FORECAST
EUR/USD WEEKLY BAR July 13, 2023: the structure that has been forming since the low of $1.0462 in March 2015 is most likely an expanding flat pattern of Primary Degree within the larger Cycle Degree-X. However, it should be noted that this pattern is still incomplete and requires a final internal wave of Primary Degree-C to conclude the formation of Cycle X. This particular cycle has been developing for a period of over 8 years.
EXPANDING FLATS
According to the Elliott Wave Principle, flats are corrective patterns that consist of 3-3-5 waves, in contrast to the 3-3-3 structure of zigzags. Flats take longer to form and are characterized by sideways corrections rather than sharp movements. These patterns can be found in waves 3 and 4 of impulse waves, as well as in B waves of zigzags and X waves of double zigzags. Additionally, flats can occur in the A, B, and C waves of combination patterns.
Flats can be classified into three simple patterns: regular, running, and expanding. The expanding flat is the most common type and always creates a new price extreme beyond the end of the preceding impulse. Similarly, the B wave of an expanding flat surpasses the start of the A wave, and the C wave extends beyond the B wave, retracing it by more than 100%. This characteristic gives expanding flats their name.
EUR/USD CYCLE DEGREE X
In the case of EUR/USD, it appears to be forming an X wave at the Cycle degree double zigzag. So far Primary waves A and B have comlpeted with C still in progress. From the EURO DOLLAR weekly chart below, it appears that Primary-A (circled red) concluded at the $1.2555 high in February of 2018. Following that, Primary-B retraced Primary-A and completed just beyond the 138.2% Fibonacci BvsA retracement level. This retracement also created a new price extreme beyond the previous Cycle-W low in classic exapaning flart price action.
Had the EUR/USD price continued beyond this point without stopping, it would have invalidated the count at the Cycle Degree. However, instead of further decline, price rallied and surpassed both the March 2015 Cycle-W and March 2020 lows. This price action confirmed the formation of an expanding flat at the Cycle-X degree.
ALTERNATE COUNTS AND SYMMETRY
It is important to acknowledge that Elliott Wave analysis is subjective and dependent on individual interpretation. Analysts may offer different counts or interpretations based on the same price data. However, the counts that adhere closely to the Wave Principle’s guidelines and Fibonacci price relations must be considered more favorable. Symmetry is also a crucial aspect to consider.
In the context of a long-term weekly count, it is plausible that Cycle X completed at the 2018 high for the EURO DOLLAR. The preceding three waves down may represent the final Y zigzag, reaching its completion at the 2022 low. Consequently, this rally could mark the beginning of a new upward trend at largeer degree. Nevertheless, it is worth noting that if the X wave at the Cycle degree is smaller than the previous Primary-B wave of its Cycle-W zigzag, it deviates from ideal symmetry. Generally, asymmetry in the form of a smaller X wave compared to the preceding B wave is considered atypical in the larger W-X-Y sequence.
When engaging in Elliott Wave analysis, it is essential to balance objective guidelines with subjective interpretation, taking into account factors like price relationships, symmetry, and wave structure. It is prudent to consider multiple possibilities and assess the overall market context to arrive at the most plausible count.
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EUR/USD FXCM WEEKLY BAR
WAVE PRINCIPLE FRACTALS
The Wave Principle is a fractal theory that encompasses self-similar structures across all degrees. In some cases, expanding flats within expanding flats can be observed. Let’s examine this self-similar fractal pattern in the EUR/USD at Primary degree. There are 3 expanding flats embetted in this Cycle Degree-X wave corrective. The initial Primary Degree Circled-A is composed of an Intermediate Degree expanding flat. And the second is at Minor degree making up Intermeidate-B. And within this you can find the third at Minute Degree making up Minor A of Primary-B. All these demonstrate the fractal nature of the Wave Principle.
PRIMARY-A EXPANDING FLAT
Breaking down the Euro Dollar’s Primary-A, we can see that Intermediate Degree-(A) topped at the $1.1716 Aug 2015 high. The pair then dropped past the March 2015 Cycle Degree-W making a new low at the $1.0340 in Jan of 2017. Price was just $0.0061 short of the 114.6% BvsA before it rallied back above the March 2015 low. In flat C-wave fashion, the pair moved up in five waves and retraced just $0.0010 short of the 161.8% CvsB for a Primary-A completion at the $1.25556 2018 high. The retracement to the 161.8% CvsB was extreme for these usually fall between the 114.6% and the 138.2% CvsB. Regardless, the subsequent 3 wave drop confirmed the Primary-A flat complete for EUR/USD.
PRIMARY-B
The EUR/USD’s Cycle-B took the form of a zigzag with the B wave expanding flat that has the expanding flat for its A wave. Intermediate Degree zigzag capped its first impulse at the $1.0884 Sep 2019 low. The pair then cut out its first Minute Degree-a (circled red) for Minor-A at the $1.1495 March 2020 high. Minor-B then retraced slightly past the 138.2% Minor BvsA to the $1.0636 2020 low. The ensuing Minor-C impulse rally was extreme reaching the 200% Minor CvsB; however, it failed to take out the Feb 2018 high, dropping from the $1.2349 which was just short of the 88.7% Intermediate BvsA. The pair then dumped in five waves to compete Intermediate-C of Primary-B retracing down to the 138.2% Primary BvsA in classic expanding flat fashion at larger degree.
PRIMARY-C
Primary-C can be broken down into five Intermediate Degree waves for the EURO DOLLAR. Starting from the $0.9535 Primary Degree-B low, Intermediate Degree-(1) rallied in five Minor Degree waves to the $1.1033 Feb high. The subsequent correction took the form of a running flat at the $1.0635 May low for Intermediate degree (2).
INTERMEDIATE 1-2 SERIES
There is a possibility that the Intermediate Degree-(2) is not yet complete, which could indicate that the recent three-wave rally from the March low might be the B wave of a potentially larger flat pattern.
Moreover, if we designate the March low as Minor-A, the subsequent upward movement would need to be classified as a double zigzag which would make the drop to the May low a 3. However, the decline from the April high to the May low consists of a five-wave series instead of the anticipated three waves. Double zigzags typically consist of three sets of three waves (3-3-3). Consequently, this suggests that the most accurate label for Intermediate-(2) is a complete running flat at the May low.
MINUTE 3 CHANNEL BREAK OUT
Moreover, the move from the July 6th low wasted no time moving up through the upper channel trend line and reaching past the 100% 3vs1 in less time it took Minute-i to form. This is classic wave 3 price action.
If price had lingered up the red dotted momentum trend line and to the left of it, then chances are price would have failed at or near the uppper channel trend line 100% CvsB. But it did not. As mentioned price bulled thorugh the upper channel trend line is short time. We can now be confidant that Intermeidate wave (2) compelted and that EUR/USD is now in the throws of an intermediate wave (3) advance.
EUR/USD FXCM 4-HOUR BAR
Minute Degree-iii target is at the $1.1443 161.8% 3vs1.
While it’s not always the norm, it’s important to acknowledge the possibility of exceptions. To qualify as a Minor B wave counter corrective, it is crucial for the pair to descend within the channel and ultimately dip below the $1.1033 Intermediate-(1) high.
However, it should be noted that this is not the norm but rather a rare occurrence. Anticipate the continuation of this rally.
