The day after tomorrow (Wednesday, June 21) I will be the speaker of the Vancouver Forex Meetup, where I will talk about the early stages of a market cycle. Besides the theoretical, technical and psychological insights, we will study two possible bases of the GBPUSD, USDCHF pairs and check out a the measurement methods on … Meetup Charts
EURUSD Let’s start with the big picture. We don’t think the dollar rally is over. We’re looking for one more drop below parity prior to a larger euro rally. A break of the internal trendline from the wave W and (D) lows, which would be back above last week’s high, would alter the short term … Is the “Trump Risk Rally” Over?
EURUSD The euro has bounced from support just above parity, although we think this bounce is corrective. Given the impulsive nature of the US equity rally, it seems that the policy divergence I’ve so often mocked, may actually prove to come to reality. Certainly, a couple of .25% rate hikes by summer may be the … Yen Short Term Strength, then 175.00
EURUSD Our top two counts suggest the euro will visit parity against the dollar. First, there’s the top count which calls for an immediate collapse, likely having something to do with the banking system or breakup risk coming to the fore. Friday’s big topping tail suggests that prices will immediately head down, and potentially to … Elliott Waves in 2017
EURUSD The euro put in a big reversal bar on Monday after Italy’s referendum. We’re counting the decline from Friday’s high as a three wave move (see below), and that wave (2) completed on Thursday. You can see it retraced between 38.2% and 50% of wave (1), a much more typical retracement than the small … Euro Not Out of the Woods
We’ve long been looking for some type of bad news out of Europe that would allow for the euro to trade lower versus the dollar, rather than good news out of the US that would push the dollar higher. We may get that today. The Italian referendum today could be the nail in the coffin … Italy Vote in Focus
We’re only going to address the elephant in the room (Trump election) to remind readers that social mood governs markets, and its process is endogenous. Meaning social mood moves of its own volition; it is not controlled by politicians. Trump’s election will create certain winners and losers, but it will NOT CHANGE ANY UNDERLYING TRENDS. … Trump, the Dollar & Yen Crash
EURUSD Last week’s blast higher puts our top count on the shelf for the moment. The sharp nature of the rally makes it look like wave (a) of 2. So, a down start to the week, followed by a push higher to test the broken trendline for wave 2 is our best count. The alternate … Dollar Loses “Policy Divergence” Strength
While I believe that all markets trade in Elliott waves, sometimes the waves aren’t perfect. Sometimes wave 4 overlaps wave 1 by a few pips, and sometimes what looks like five down in an ever expanding market (like stocks which are measured in a depreciating currency) is actually a false break. Regardless of being a … Perfect Elliott Waves
We’ve made the case for well over a year now that our “dollar strength” theme, is more like “other currency weakness” than any “policy divergence.” In other words, it’s the underlying weakness in European and Asian economies that are allowing their currencies to fall against the dollar; as oppossed to dollar strength coming from the … Entering Capital Preservation Mode
EURUSD Last week’s title was dead on, “Euro to Follow the Pound.” The breakdown from the triangle happened on Tuesday, and it was straight down from there, likely completing wave (i). A small bounce may develop in wave (ii), but remember what we cautioned several weeks ago. This triangle has been so long in development, … EURUSD Out of the Triangle!
EURUSD There was a short term break down on Thursday which looked like our top count from last week playing out. But, Friday’s reversal keeps the euro in a triangle, of a triangle, of a triangle, per our alternate count from last week. Unless prices push impulsively above the wave C high, we’re inclined to … Euro to Follow the Pound
EURUSD We remain on the side that this consolidation is corrective in nature, and that a collapse is coming. The European banking system is woefully under capitalized, and the bailout structures aren’t in place. We have little doubt that the ECB and Brussels will cobble a system together once it’s deemed necessary, but the problem … Euro’s Spring Compressed
We’ve all heard comments like, “Orange is the new black.” Well, in today’s upside-down world of monetary policy all three major central banks decided to not loosen policy further. Most market participants were disappointed, although it did spark some “risk-on” behavior. But, underneath the bullish action, some subtle deterioration in the “Central Banker Omnipotence” theme … ECB, BoJ & Fed Tighten By Failing to Loosen Policy
EURUSD The bullish case for the euro has taken a turn. We’ve long been expecting this corrective rally to fail, and it seems the time may be upon us. After wave (E)’s false trendline break, a choppy decline ensued. But, the rally up from the 1.1123 low is a clear three wave move. As such, … Dollar Strength Doesn’t Mean Bullish Risk
EURUSD The euro has been consolidating for over a year now, but it’s gained almost no ground. Without something impulsive to the upside, we can still assume parity is coming eventually. The action up from the wave (D) low is choppy and overlapped, and prices found resistance at the broken up trendline. It’ll take a … Elliott Waves Suggest Japanese Trouble
EURUSD We’ve left the top count in place out of convenience, more than the fact that we think prices are going to reach 1.1400 next week. It’s still possible, but if Friday’s low is taken out in any meaningful way, that means prices will be back below the down trendline off the May/June trendline, and … Reversals Abound
EURUSD Our top count continues to lead, although we’ve altered the count up from the July low. It’s now a flat correction with a couple of more waves to go. Should 1.1200 give way, something more immediate to the downside is likely forming, and that likely would mean bad news out of Europe (perhaps out … More of the Same
EURUSD The break of the 8/5 high left a clear three wave decline from the 8/2 high, and we think higher is still to come. In fact, we’ve altered our larger count, now suggesting that prices are in wave (E) of ((X)) up from the low. That means the near term down trendline may break, … Euro Stronger, GBP & Down Under Not So
EURUSD Our working assumption is that the entire consolidation from the 2015 low is corrective to the upside. Additionally, we potentially have a 1, 2; (i), (ii) count from the May high. Certainly, if that count is correct the downside is substantial. When you add the near perfect 61.8% retracement of the wave 1 decline, … QE is Ambulance That Runs Over Patient
EURUSD Friday’s big rally leaves a little bit of doubt about the “consolidation below support” comments. However, prices are still below a broken up trendline and a down trendline, so bulls will need to overcome those to disprove our bearish view. Should prices break above both, we won’t fight any further progress, as that will … The Winding Road
EURUSD Only brief comments tonight. EURUSD has run into resistance three times now post-Brexit. The sideways consolidation likely means continuation, which in this case is lower, and perhaps sharply so. A break of the up trendline cements Thursday’s high as critical resistance. Until then, further sideways action could develop. It would take a push above … Gassing Up the Helicopters
EURUSD Pretend for a moment you know nothing about the pair above, and instead focus on the lack of an impulsive advance from the December low, and the broken trendline off the low. Both of those would be bearish by themselves. Combine that with a retest of the broken trendline, a very common occurrence, and … Keeping It Simple with Elliott Waves
The Wolf suggested traders take the week off, and despite the dramatic moves, one could have made the case that was the thing to do for swing traders, although it was a day trader’s paradise. Now that Brexit has come and gone, literally, what does that mean for currencies, and more broadly economies, and the … Do Dramatic Moves Suggest Further EU Breakup?
EURUSD We’re still bearish, looking for an expanded flat to unfold for wave (ii). Ideally, prices will remain below the down trendline to keep our count firmly on track. Obviously, we have event risk this week with the Brexit vote happening on Thursday. We might have a sleepy week until then, and then strong whipsaws … Traders, Take the Week Off…
EURUSD We suggested that the 61.8% Fibo level would be helpful to the bearish case if our top count was correct. Indeed, the sharp reversal from that level keeps our top count intact. Now, we can use the wave 2 high as our risk control for both trading, and our top count. Should prices push … Brexit is Bad News For EU’s Overpriced Bonds
EURUSD The trendline offered more support than we thought it would. Still, we see the bounce as a corrective wave 2 with either Friday’s high wave iii of (c) of 2, or that we should see that top early week. Any push past the 61.8% retracement will begin to argue that something less bearish is … European Banks In Trouble
EURUSD Last week was picture perfect for our EURUSD call. A corrective bounce led to sharply lower prices, and while we’re now at trendline support, and near the wave (iii) low, we’d err on the side of lower prices. A wave (iv) bounce is due to develop, but calling bounces in a larger downtrend is … The Coming Japanese Debt Forgiveness, Per the Elliott Waves
EURUSD There’s no change to our bearish view, and we can now lower critical resistance to the wave (i) low at 1.1386. If our top count, and bearish view, is correct, then prices are unlikely to see that level again until the ultimate low near parity. Look for the up trendline to provide some support, … Scenario Planning With Elliott Waves
Here are a couple of charts we had requests for. Oil Our call back in 2014 was for oil to collapse down towards the 2009 low. At the time, it seemed almost silly. But, it indeed came to pass. Now what? Well, although there was a slight RSI divergence into the low, oil isn’t out … Wolf’s Prey Bonus Charts
EURUSD Friday’s break left a three wave rally in place, which we’ve labelled wave (ii). We may get an early week rally attempt, but we think the euro has turned lower. That’s not to say it’s going to be a straight shot lower, in fact, after reaching parity, it seems likely that EURUSD will be … Elliott Waves Clearer Than Brexit
The Wolf was fortunate enough to spend a few days last week at the headquarters of Goldman, Sachs. I say fortunate because it’s always nice to interact with smart, thoughtful people, even if you happen to disagree about the outcomes with the vast majority of these rocket scientists. Essentially the firm opinion is that a … Equilibrium Models in a Disequilibrium World
EURUSD Friday’s break of 1.1399 means EURUSD traced out three waves down from the 1.1465 high. So, we’re now looking higher into resistance, and as most are focusing on a potential breakout, we see a “sell the range high” type of situation unfolding. Of course, we’ll need to see how next week plays out first, … Painted Into a Corner
USDJPY Truncation or not, Friday’s action is what we warned about. Keep in mind what the BOJ is doing. It is monetizing roughly the same monthly amount through QQE as the Federal Reserve did in its QE3. The difference is, the US economy is four times the size. That would make the GDP equivalent of … Economic Simpletons
EURUSD We weren’t willing to commit to the idea that EURUSD had topped last week, but we are now. It appears there’s been a perfect reversal from the resistance are we identified long ago (red horizontal line). Unless prices push past last week’s high, we’re aggressively bearish. Notice that into last week’s top, we did … Two Beautiful Reversals
Ah the yen. In a previous capacity, The Wolf dissected the BOJ’s fruitless attempts to reflate the Japanese economy. It has been pushing on a string, up against the zero bound since shortly after 1993. And to what avail? Well, as central banks go, it’s done well. Prices have been stable, and unemployment has been … When Policy Makers Vomit
EURUSD Prices extended higher, but contrary to many people’s view, the euro isn’t out of the woods. In fact, we see prices vulnerable to a reversal. Given the ECB’s absurd corporate debt QE program, and its floundering economies, we think the euro will soon top. Despite our view that the Fed isn’t going to be … How Soon Till Non-USD Problems Surface?
USDJPY The yen strengthened, as expected, after the triangle pattern was complete. While the bounce in wave (e) was towards the upper extreme, the bounce was a gift for the bears. Such a move is why the triangle is The Wolf’s favorite pattern. It has a defined, small risk level, the wave (c) high, and … Central Bankers Attempt to Devalue Each Other
EURUSD We know that the rally from last March’s low was in three waves, as was the decline into the December low. Given that, we’ve been looking at either a flat or a triangle. While the flat interpretation isn’t impossible, it is unlikely while prices remain below the wave (C) high. We’re looking for one … Triangles Are Coiled Tightly
EURUSD Five waves up are complete for wave A, after a three wave decline for (D). We’ll look for an early week corrective decline to be followed by strength up towards the key 1.1080 pivot. After that it’s either chaos in Europe, or a resumption of policy divergence in the US that leads EURUSD to, … European Chaos or No News is Good News?
Despite the economic fact that countries can’t devalue their way to prosperity, it doesn’t seem to prevent every country from trying it. As a general rule, a country’s currency follows the productivity of its economy. As such, a strong, productive economy usually results in a strong currency. Of course, a strong currency benefits all citizens who … Currency Wars Abound as NIRP Debated
EURUSD We didn’t mention the wave ((X)) triangle possibility last week, and considering the three wave nature of both the wave (A) and (B) waves, it’s a solid alternate. We do like the idea of the flat more, mainly because there’s no “policy divergence” coming from the Fed, but notice how prices have run into … Elliott Wave Currency Update 2-13
EURUSD Once prices pushed about 1.0968 they wasted little time. Since they pushed about our cited critical resistance, we’ve altered the larger count. Certainly, the Sustainable Bear readings allow for prices to collapse to a new low, which is exactly what our count suggests. It’s just that we’re likely to see prices push back into … Right Side or Left Side of the Chart?
EURUSD Here’s a closer look at the fourth wave triangle, which saw a sharp downside reversal on Friday. Continue to look lower, as long as prices remain below Thursday’s high. Use an early week bounce to get aligned with the bears. A break of the wave (d) low, would also put prices below short term … Dollar Strength Ahead, Buffoons in Japan
EURUSD We’re still sticking with the view that EURUSD is in a fourth wave. It appears to be unfolding as a triangle with wave (e) either complete, or nearly so. Notice that RSI has dropped below 50, and with prices below critical resistance, there’s not really a reason to fight lower prices. A trendline drawn … Commodity Currencies Suggest US Dollar’s Run Ending
EURUSD Prices turned up sharply this week, even as the USD remained stronger than other pairs. Prices closed above the up trendline, when they had all the chance in the world to move lower. That suggests wave 4 is still in progress, or that the alternate count is correct, which suggests prices are in wave … Global Risk Weakness, But not Euro
The year 2015 was one of divergence. The S&P 500 closed very near its all-time high, despite the significant declines in the Russell 2000, Dow Transports, junk bonds, energy, materials and retail stocks. A sustainable trend is typically marked by uniformity, where every index acts nearly the same. Trend divergence, or non-uniformity is a sign … 2016: Year of the Terminal Rally
Well, the Fed finally did it, hiking rates up to .25%. Now, most Fed watchers are suggesting that rates will hit .75% by the end of next year. Yeah, and all of those Barron’s “expert forecasts” suggest that the S&P 500 will hit 2200 next year on the back of $125 in earnings. Things are … ZIRP No More, Dollar Into a Top
EURUSD Thursday’s rally activated the alternate count from last week, and you’ll notice that the rally faded prior to critical resistance from the wave 1 low 1.1087. That’s the dividing line between the to p count, and the alternate which suggests prices are still in wave ((B)) of (((Y))) to the upside. The top count … The One Day Wonder
When it comes to the chart pattern of double tops, traders often look for perfection. I would like to advise against perfection; and, instead, introduce how to search for the taste of a “good enough pattern.” Imagine that prices progress in an uptrend and then suddenly find resistance. Prices pull backs then turns north again, … Trading the imperfect double top – PART I.
Here’s our latest Elliott wave currency forecasts. It seems that the EURUSD chart dictates further USD strength, which likely means a not awful employment report this Friday, or any other terrible economic news. That in turn, allows the Fed to do a mini-hike of short term interest rates, which may wreck havoc on the repo … ZIRP to End, Long Live QE
It seems likely that the Fed will raise rates in December despite some underlying weakness in the global economy. That would explain our “stronger dollar” theme in today’s report. Perhaps it’s “one and done” though, where the Fed raises rates 25 bps in December, only to proclaim QE4 as an emerging market/junk bond bubble default … One Step and a Face Plant
The August SPX decline had strong momentum, and the October rally was also relentless. What is the trend then? When prices are capable of gaining momentum in both directions, it causes confusion in traders’ heads. Confusion calls for woes and fear. When the emotion becomes strong, price volatility increases and persists; trends seem to emerge suddenly … SPX Pinball: Room To Grow… To the Right
Following the harsh bear spiral on the crude oil market in 2014, not much price change has happened so far this year. The year’s overall sideways look, and the sustainable bear RSI levels on the weekly chart, suggest the continuation of the bearish tendencies. As we put it in the Glossary section of TraderSkillset.com, when … Crude Oil Chart with Elliott and RSI from Laszlo’s Trading Room
EURUSD Prices didn’t rally in an impulsive manner up from the March low. As such, the larger trend is down. Since prices have now broken the up trendline, and RSI hit Sustainable Bear territory bulls have little in their favor. A bounce for (ii) is awfully small, but how much of a bounce do you … Fed Hiking in December Say the Elliott Waves
EURUSD Regardless of what we think about the Fed’s inability to raise rates, the dollar seems to be powering higher versus the euro. Last week’s trendline break completed a five wave decline, and it also pushed RSI into Sustainable Bear territory (lower grey zone). As such, a corrective bounce will re-leave the selling pressure, likely … The Dollar’s Resurgence?
Traders can profit from a set of lines that enables them to tell apart a trend from a correction. This discernment is essential when it comes to adjusting our trading strategy to the current market condition. What is more, these easy to draw lines represent a thinking process aimed at the proper assessment of the … Trend Division Line
EURUSD Last week we posted our bearish stance, and nothing has changed. The drop below the lower line of the trend channel, on a Friday close, suggests lower prices are to come. Daily RSI has almost reached Sustainable Bear territory (lower grey zone), which would be the nail in the coffin for the bulls. Use … Elliott Wave Forex Update
In my last post I mentioned an upcoming vacation. My last day on vacation, however, we received the news every parent dreads. My brother’s two-year-old son passed away after a tragic accident. The last week and a half I spent trying to calm, comfort and console the unexplainable. For the last couple of weeks, the … The Wolf is Back
The Wolf is taking the family to Disney World tomorrow. But, after packing I wanted to share a quick update. There will be no update this weekend, and next weekend’s will be Sunday night and brief. We’ll be back to the normal Saturday updates the following week. EURUSD The market has done nothing to disprove … Quick Elliott Wave Forex Update