salute & totally agree w/ u. amazing view. bravo..
panda eyes

So,

what do you think will the outlook for tomorrow's market will be? Will it go up 1.54 or down? Thanks guys!

hi American T,

so you say it will go back to 1.44? Anytime soon? What about tomorrow Friday and next week?

I'm not sure yet what stage the EUR/USD will be in at the end of the year, but I do feel the dollar is forming a medium term bottom. The EUR/USD should return to its prior 4th wave in the low-to-mid 1.4400s before even thinking about another rally. This should take weeks if not months. The dollar short trade is very crowded and becoming overdone, and the technicals support it from what I can see. The sentiment indicators for dollar bears have been at high extremes for weeks, the wave structure shows the completion of a 5th of a large 5th wave tracing out now, stochastics keep dragging while the price makes new highs on most time frames, and the dollar index itself is making new lows in price that are not being confirmed by stochastics and the RSI. In my opinion, the dollar is forming a medium term bottom and will begin a retracement of about 1000+ pips soon.

American-T

No signal confirmed yet. However momentum is waning and I've exited all my short dollar positions except the USD/JPY which still should make a new low. Confirmation of a reversal should come ultimately when a convincing 5 wave decline traces out, and ultimately breaks 1.5140.

I'm sure I'll post here once I get short the pair. But right now, I have no position in EUR/USD anymore and I'm watching and waiting.

American-T

I agree with your count completely. Nice work. I use GFT and I love their charting software but they don't have a feature to copy a chart into a JPG so I could post here. This is how I have my wave count.

American-T

Thank you. I'm humbled by your comment.

American-T

Wow, these are some really good questions and I’ve been struggling a bit with this myself. So I broke them up. I have a lot to say about the topic but I’ll keep this somewhat short. My view is that the USD/JPY just completed a wave iv within a larger wave 3 within a larger wave (3). So we should have one more low in a wave v to complete wave 3. The corrective rally following that [wave 4 within wave (3)] should be in line with the overall dollar rally across the board. However my view on equity markets is extremely bearish and we still have new lows to break (from January) which should be happening soon. Carry trade, risk sentiment, and equity market correlations have deteriorated with the USD/JPY, however they have not disappeared. So I feel that the dollar rally will push the opposing dollar pairs down significantly, but the USD rally against the JPY will be subdued due to a large equity decline that’s about to occur, if we’re not already in it. So in short, I feel that the dollar will rally across the board, but the USD/JPY will be pulled down by equity selloffs, while being boosted by dollar strength. So the rally in the USD/JPY in wave 4 will be minimal, while the rallies against the EUR, GBP, etc. will be significant. Another side bar is that over the past year or so, large equity selloffs have resulted in the liquidation of higher risk currencies such as the EUR and GBP. So even thought the US stock market is selling off, the risk aversion carries over to liquidating EUR and GPB long positions and dollar buying.

But ultimately I still have to believe in and follow my strategy and charts for each pair. If I trade based on logical connections with other pairs, I don’t think I’ll be successful as often times the larger market can remain illogical longer than one can remain solvent. The charts show a 4th wave rally in the USD/JPY coming soon which should be followed by further heavy declines while other charts show the dollar gaining possibly 1000+ pips against its European counterparts. So I will trade based on that. Believe it or not, that was the short answer, lol.

Well I touched on this above, but let me clarify a little more. The USD really just has to make a new low beneath 102.60 to complete wave v. Right now it’s close to 103. So it can easily make that new low soon, perhaps today, and then rally in a medium sized wave 4. This rally should be in line with the dollar rally across the board. But as I said above, the rally in this pair should be limited as equity markets should plummet, and therefore limit the rally potential in the USD/JPY.

The equity markets are teetering on the brink of destruction and crushing their January lows. The stock market, and global economy is in serious trouble from the credit crunch, most of which you won't hear on the mainstream, only stock market investors are illogically holding this market up for now. But it won’t last long. This market is on the verge of a massive selloff.

The way I see it, the pair is in a wave v within a wave 3 within a wave (3). Once a new low is made beneath 102.60, the reversal potential is increased drastically. But it’s still only a wave 4 within a wave (3). This pair should get to 80 in due time. But be ready for near term strength as the dollar plays out a long multi-week corrective rally.

I welcome any of your thoughts on the topic or what I’ve said.

Regards,

American-T

Thanks American-T.

I am not actually trying to pick a top in Euro/USD now, I will just wait until price decline in five waves.

The RSI is 80+ getting me concerned though. The cable on the other hand is nearing a very important fib level and potential reversal zone. I think the bearish potential is great for these two. But no signs of top yet.

Time is the toughest indicator for me, but price is much clearer. The reversal should happen soon, perhaps within a week. Today and tomorrow could quite possibly see the euro extend its gains against the dollar, but the risk is outweighing the reward now so I've exited my long positions. Now I just have to wait to see what the market will tell me next. A reversal happening within a week is quite possible.

The USD rally against the EUR to the low-to-mid 1.4400s looks to be a fairly large wave 4 correction. Wave 4s tend to be fairly weak, somewhat consolidative, corrections. So this decline may just be a gradual slow and choppy decline to the levels I just mentioned. If so, it will probably last weeks if not months and be bit of a psychologically challenging move because it may not be fast and fierce, but instead be real choppy and slow. This 4th wave has a high possibility of beginning very soon.

American-T

All "Elliot Wavers" here. But me. So....
Has anybody any idea about an 'extended wave 5' ?
I know virtually nothing about EW (seriously) but I was told we could be in this 'extended wave 5'' which could mean we spike up to 1.63 'just like that.' The characteristics of this wave 5 seem to be the sort of price action that we see over the past few days: stretched RSI, divergence, but no retracement.
And any suggestions where to get info on EW is appreciated. Google comes up with 357.000 hits.....

Some suggestions are to start with the main Daily FX site, click on Forex for Beginners and fill in the form and check of the Elliott Wave option. You will receive a report that will give you a basic idea. Then you can also try reading the EW thread, and read The Elliott Wave Principle book. Hope this helps.

Thanks for your help, Gizmo. Have been in this business for 25 years now so did not think about 'Forex for beginners'
I never used EW, but I see it has many followers here so I thought it would be wise to get some education. Maybe in a few weeks time I will be talking iii in 3 too !
Good luck.

Extended 5th is possible however I feel it's unlikely. Momentum is really struggling and other dollar pairs show signs of exhaustion too.

The best place for EW in my opinion is Elliott Wave International. FXCM also has some free info on their news page. Jaime Saettele is their EW analyst and he's usually very friendly and helpful on EW questions in their Elliott Wave forum.

In my opinion, this theory is a superior analysis tool that overshadows anything else I've ever seen. It's also the most complicated.

American-T

I think wave 5 won't be expanded. Very unlikely.

RSI is above 80 which argues a corrective move "screaming". For euro to breach that price, it just can't do it like that. I find it a bit unrealistic. Lets say 1.55 is more realistic. I do not know, I will just wait for the correct decline to occur to look for shorts.

However, I find trades in the impulsive pairs more attractive. I mean pairs which start impulse waves.

USDJPY, and Cross/Yen as example.