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EURUSD: Where Have We Seen This Picture Before?
Looks like there is another "triangle" forming in the EURUSD right now.
You may remember the Free Update article "Euro Vs. Dollar: $1.30 and Counting…Down?" that we published on elliottwave.com on October 21. It was the day when the U.S. dollar hit a new 1½-year high against the euro after the euro-dollar exchange rate had fallen to $1.3050.
In that article, we referenced a forecast by Elliott Wave International's Currency Specialty Service, which the day earlier – on October 20, before the EURUSD had slid to that 1½-year low – made this bullish forecast for the dollar:
Update For: Tuesday [October 21]
Posted On: Mon, 20 Oct 2008 19:45:00 GMT
EURUSD [Last Price]: 1.3324
[Lower, into a bottom] The euro is on its way to a new low beneath 1.3261.
The reason I bring this up is because that forecast for the (then) new low in the EURUSD was not based on any economic or political news reports. Those, if you've been watching forex markets long enough, have about the same predictive value as a coin flip.
That October 20 forecast was based on the fact that, as you can see in the chart above, the EURUSD, at the time, had formed what Elliotticians call a "triangle" (circled in red above). And triangles always resolve in the direction of the preceding trend – which, in that case, was down.
Which brings us to today's Elliott wave picture in the EURUSD. Here's the very latest EURUSD chart posted for subscribers right now on the Daily forecast page of the Currency Specialty Service:
See that "first" triangle squeezed between the two converging lines? And now look at the Elliott wave pattern in which the EURUSD finds itself now. Does it not look like another triangle?
It does. In fact, tonight's Currency Specialty Service Daily forecast (November 7, online now – Ed.) says that, "…the bearish triangle count is gaining in probability, and if correct prices will recover slightly in wave e…" before progressing lower. There is also another, more bullish short-term potential for the EURUSD right now.
So don't be surprised if next week, no matter how "bullish" the news may sound for the dollar, it might find it difficult to stay strong. But don't wait for next week's economic news to confuse you – get the latest objective analysis with EWI's Currency Specialty Service now.