EURUSD: Follow Up of the Short Term EWP

By: TheWaveTrading | Mon, Sep 17, 2012
Print Email

This is a brief follow up "grounded" on my last update of the long-term count posted on Sunday (Sep 9).

As a reminder I am "working" with 2 potential scenarios, which can be seen in the 2 following charts that were posted on September 9.

1. Double Zig Zag Option:

EURUSD Double Zig Zag Option
Larger Image

2. Triangle Option:

EURUSD Triangle Option
Larger Image

Judging from last week rally, I now give for granted that price at the July low has established an intermediate bottom. Therefore the corrective down leg from the May 2011 lower high at 1.4940 is finished.

But since this down leg is corrective I rule out that a Major bottom is in place hence the longer-term trend from the July 2008 remains down.

This bottom could be either the wave (A) of the second Zig Zag down from the May 2011 top or the wave (D) of the discussed Triangle option.

Therefore price is expected to recover at least a Fibonacci retracement or even more if the long time frame EWP will be the Triangle option.

From the July lows price should unfold a Zig Zag / Double ZZ, therefore after a pullback I expect more upside.

Weekly momentum is clearly suggesting that price should carry out a much larger rebound in the weeks ahead. Weekly stochastic is entering the overbought zone but it can remain overbought longer before a meaningful top can be established.

EURUSD Weekly Momentum
Larger Image

In the daily momentum we have an extremely overbought RSI, on Friday it closed at 80!!! Here the trend line when/if it is breached it will confirm that price has began a pullback.

EURUSD Momentum
Larger Image

In the daily chart below I have labeled a potential count that should be establishing the top of the wave (A) of a potential larger Zig Zag.

We have 4 consecutive eod prints above the Bollinger Band (Another indication that this move is quite extended and a tactical pullback is due).

Larger Image

When this up leg is in place I doubt that we shall see a deep retracement. The 200 d MA = 1.2877 could be retested, but I doubt the we will not see dip buyers if price retest the break out area at 1.2748.

Price has to breach the rising trend line support in order to question the July's reversal.




Author: TheWaveTrading


Contact: If you would like to contact the author, you can e-mail him at

The main objective of this project is to share my views on several markets and asset classes.

In the initial stage TWT website will be a free service.

My main focus will be the equity market with SPX being the leader but I will also follow US equity sectors, major European indices, fixed income, currencies and commodities markets.

My analysis is based upon traditional Technical Analysis, Elliot Wave guidelines and investor sentiment.

My goal is to establish the most likely path that the price of a particular asset will undertake and profit through ETF instruments both on the long and short side and mainly with leveraged ones (2 x & 3 x).

The advantage of ETF investments is that it allows getting involved in equity indices & sectors, currencies, fixed income, commodities etc.

Therefore the main purpose of TWT will be to establish investment strategies regardless if the market is in an up trend or in a down trend, leveraging the chosen scenario while managing the risk by establishing protective stop losses.

Hence I will always define the risk, I will try to let winners run the wave and I will cut the losses if my strategy is wrong.

Disclaimer: The content of this article is for educational purposes only, the information supplied is not a recommendation to buy or sell any security or financial instrument. nor the owner can not be held responsible for any loses occurred from the information provided within the website.

The Information supplied cannot be copied or reproduced without the permission from the owner.

Copyright 2011-2016 TheWaveTrading

All Images, XHTML Renderings, and Source Code Copyright ©