nice toonage,
where is the EUR/USD headed in the short term,..... yeah i see that you think it could hit 1.62,...... but 'maybe by the end of summer', where do you see it heading by friday the 18th?

That's a good thing to do. Yup, you can start to buy small lots of long positions now. I have started to buy small lots of long as well, with big one prepared at 1.578 (in case). My short would be hit if price bounces back to 1.586.

cmellon,

I'm new to forex and I find your comments very useful to understand the dynamics.

What would be your stop loss & target (6200, I suppose) if we hit 5780?.

good luck all,

Hi there,

If you buy @5780, stop loss can be set slightly below the close of wave 1 @5740.

The fact that wave A and wave C bounces at exactly around 0.382 and 0.50 fib level gives me a bit confidence that the EW count of a 5 wave rally from July 7 @5610 to July 15 @6039 is correct. I am assuming now that wave C has formed the bottom at 5816, but of course by the close of the day or tomorrow, it can go down further to 5780. Usually wave C = wave A in length.

Target is hard to tell. As we complete wave C, that was the end of wave ii. We will then be in a larger wave iii of 3 (big picture). In EW, wave 3 is supposed to be the fastest and the most furious. Since it's wave iii of 3, then I expect it's even faster. 1.62-1.63 is a reasonable target for mid term. For short term, 1.61 is the target.

Hope that helps.

I completely agree with your analysis. I can't really see the EUR fall that much more, so I too am waiting for the burst up to 1.62. Waiting for opportunities to buy more long lots. They say patience is a virtue. I guess we will see what direction we will be truly heading the next few days.

CMelllon, Keep up the great work and charting!

Thank you, a very detailed and useful analysis as always.

Best,

Nice charts cmellon, have had a busy week so not posted much here, good to see all the action.

I think EUR is allowing USD to correct somewhat, starting to turn bullish for a test of 1.605 and beyond. Long orders waiting @ 5790 and a closer 5827, don't want to miss this wave

GL everyone.

I was wondering if anyone has tried this sma 5 sma 13 sma 62 for scalping?

I found this trading method on another board that has various methods that traders use.

I have been doing well scalping with this one!!!

Just some thoughts???

Have a nice day and may all your trades go well.

PS-This is my favorite board for some very good info, thx to all!!!

above sma on a 1min chart or 5min?? thx

my Plan didnt trigger, hmmmm

For anybody bullish on the dollar, here is a VERY good read from Bloomberg...

Dollar Optimism Dissipates as Confidence in Fed Ebbs (Update1)

By Ye Xie and Stanley White

July 16 (Bloomberg) -- The U.S. dollar will weaken against the euro, yen, Brazilian real and Swiss franc in the next six months as confidence in Federal Reserve and Treasury efforts to keep the economy out of a recession fades, a survey of Bloomberg users showed.

U.S. investors turned bearish on the dollar for the first time in three months, according to respondents in the monthly Bloomberg Professional Global Confidence Index, which questioned 5,450 users from Los Angles to Paris to Tokyo. Participants became bullish on the franc for the first time since March and less pessimistic about the British pound.

The results are consistent with expectations of futures traders, who are placing less of a chance that the Fed will raise its benchmark interest rate from 2 percent this year. The Dollar Index, which tracks the currency against six of U.S. major trading partners, fell to a three-month low yesterday on concern that losses at Fannie Mae and Freddie Mac, the two largest U.S. mortgage firms, will slow economic growth.

``The markets were naïve to think that the Fed's efforts to restore stability would be enough to prompt an immediate recovery,'' said Paresh Upadhyaya, who helps oversee about $50 billion in currency assets as a senior vice president at Putnam Investments in Boston and participated in the survey. ``It takes time to resolve the issues in the housing and financial sectors, and these problems will prevent any sustained recovery of the dollar.''

The index of expectations on the dollar for U.S. users fell to 45.44 in July from 58.49 in June. A reading above 50 indicates participants expect the currency to appreciate. Users in Switzerland registered 59.37, up from 42.24 last month. The index rose to 42.41 in U.K., the most since March.

Treasury Initiative

Currency strategists are more bullish on the greenback than the survey respondents. By the end of the year, the dollar will strengthen to $1.50 versus the euro, according to the median of 38 analysts in a Bloomberg survey.

The dollar declined to $1.6038 per euro yesterday, the lowest since the introduction of the shared European currency in 1999, and was at $1.5844 at 11:38 a.m. in New York. The dollar weakened the most against the yen yesterday since the March collapse of Bear Stearns Cos. It traded at 104.69 yen today. It traded at 1.5980 against the real and 1.015 versus the Swiss franc.

Treasury Secretary Henry Paulson said July 13 that he would seek authority from Congress to buy stakes in Fannie and Freddie and their credit lines. The Fed authorized the companies to borrow directly from the central bank. The dollar may extend its declines below $1.60 because of the potential costs of the rescue, UBS AG and Barclays Plc said in reports yesterday.

`Downside Risks'

Users in the U.S. became less certain that the Fed will raise borrowing costs. The index measuring the outlook for the federal funds rate fell to 57.35, from 60.35 in June. Their views on the U.S. economy turned more negative, pushing the index to 8.77, the lowest since March.

Treasuries rose after Bernanke told Congress yesterday that there are ``significant downside risks'' to growth, abandoning the message of the Fed's June policy statement that said the risks had ``diminished somewhat,'' while repeating warnings on inflation. The shift reflects renewed turmoil in markets that forced the Treasury and Fed to mount the rescue of Fannie Mae and Freddie Mac.

Users are not as sure 10-year Treasury yields will rise. The sentiment index on yields fell to 66.72, from 70.76 in June.

European Pessimism

UBS, the second-biggest currency trader, is keeping its forecast for the euro to fall to $1.53 by end of the third quarter and to $1.40 by the end of 2008 as Europe's economy slows, said Geoffrey Yu, a London-based strategist. The European Central Bank lifted its main refinancing rate by half a percentage point to a seven-year high of 4.25 percent on July 3.

Participants in Switzerland continued to forecast the Swiss National Bank will raise its benchmark rate from 2.75 percent. The index that measures expectations for borrowing costs rose to 65.11 in July from 61.21 the previous month.

Users in Japan are more optimistic about the outlook for the yen, with a reading of 55.08, up from 43.08 in the previous month. The yen rose 15.4 percent against the dollar in the past year as the collapse of the U.S. subprime mortgage market prompted investors to pare carry trades funded in the Japanese currency.

In carry trades investors borrow in countries with low interest rates and invest in higher-yielding assets elsewhere. The risk is that currency moves erase profits. Japan's 0.5 percent central bank rate is the lowest among major economies.

``We've been bullish on the yen since earlier this month,'' said Kimihiko Tomita, head of foreign exchange in Tokyo at State Street Bank & Trust Co., a unit of the world's largest money manager. ``It's clear that it will take a lot of time to solve problems in the financial system. We expect risk aversion to boost the yen.''

I am still short from 6020. I didn't expect this big of a tumble down today so I didn't set any limits. Do you think we will retest 5780 tonight yet or should I close down the short and start to accumulate longs on the dips. I have been pretty good with playing trend lines, but don't have a clue as to the EW principle. Right now I am up 178 pips or so and would like to stretch this trade out as much as I can!

I should add that this trade is in 1 of my accounts. My other account I didn't have any shorts until last night and those were already closed today when I turned on the computer. I shorted @5920,30 and 40 with limits set @ 5860,50 and 40 so I have already booked some good profits in that other account!

Good job!

A.

all times. I use this method with 1-5-15 min. Also RSI follows well with these sma's. I have tick opened and watch it steady along with the RSI and you will see a very well tuned buy and sell with the tick RSI and movement. I love the cross over on these sma's!!!

GL

Hi there,

1.58 yesterday is maybe the bottom of wave C, but it could still dip further. If you want to catch more dip while at the same time protecting your big profit, you can put a stop loss somewhere close such as 1.586, while trailing your profit.

In EW principle (if the count is correct ), we are now in wave iii of 3 of V after completing that last drop. This just basically means that we would have a huge ride up soon (Jaime says the speed will go parabolic). Please note though that no single trading method is foolproof, so always have proper risk management and stop loss.

Good luck.