Elliott Wave Analysis of the EUR/USD Currency Pair by Sid from ElliottWavePredictions.com

Elliott Wave Analysis of the EUR/USD Currency Pair by Sid from ElliottWavePredictions.com. Click on the charts twice to enlarge.

I’ve decided to re-classify my main and alternate wave counts for the Euro, so that both are now equal in probability rank. I’ll call them Scenario A and Scenario B, which are pictured above, and described below.

The Euro has continued to move in a tight range between about 1.41 and 1.44 since July 27, and has, quite oddly, gone virtually nowhere while the equity markets have corrected over 17% (so far), so both scenarios above remain viable. The internal wave structure for the past 7 trading days is ambiguous. This might be a good time to look for MACD divergence on 180 minute or greater charts as the best clue to any potential breakout that has enough pent-up energy behind it to solidly move out of this range.

Scenario A: This count calls for truncation to have already occured at 1.45362. That would mean that the Euro has already seen the end of the contracting ending diagonal that started June 2010 at 1.18765. Since then, the downward movement is likely a 1-2-1-2-1, with the next wave 2 correction underway. This is a very bearish wave count. Invalidation is at 1.45362, and the eventual target is below 1.233. Admittedly, my calling for the truncation to have already occurred is being influenced by the numeous interventions from Central Banks around the world, (and they appear to keep coming), along with the extremely bearish outlook in the equity markets.

Sccenario B: This count calls for the Euro to somehow finish a normal, larger pink abc zigzag starting from the (July 12) 1.38373 low, with the pink “a” finished at 1.45362 on July 26, and wave “b” possibly still extending downward. This count is more bullish, at least for a couple more weeks, and expects that once wave b pink is complete, there will be 5 green waves up to normally above 1.49404, although a continued expectation of a truncation (meaning that the Euro can’t quite reach above the May 4th, wave-3-blue high of 1.49404) is possible, and is actually likely in my opinion, if this scenario is correct. Invalidation is at 1.38373. The long-term target is the same: below 1.233.

In my last Euro post, I placed the following large words on the chart: “Truncation Highly Possible”. This is substantially what I believe has, or soon will occur.