Today we focus on EURUSD as M.Draghi’s speech is anxiously anticipated. Volatility will probably be high late noon and that is why we try to be ready for any outcome. We generally are downward biased regarding this pair. As shown in the chart above, EURUSD has retraced almost 61,8% of the entire decline from 1,3715. After testing the 1,35 support it now trades back up above 1,3550 testing the 1,3590-1,36 resistance. As far as the is concerned, we believe it is more possible to see a new 3rd wave downwards. In other words we think it is more possible to see a break of the green support levels and a move towards 1,34. If short, then the levels to look out for are the red resistance levels. If those levels are broken we could see another important leg up towards 1,37-38 in EURUSD. Those two levels should be treated with caution if you have a long or short position. If you have no position, better act after and only if a level breaks.
As always, thank you for taking the time to catch up on my thinking.
The Elliott wave principle is a form of technical analysis that some traders use to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology, highs and lows in prices, and other collective factors. Ralph Nelson Elliott (1871–1948), a professional accountant, discovered the underlying social principles and developed the analytical tools in the 1930s. He proposed that market prices unfold in specific patterns, which practitioners today call Elliott waves, or simply waves. Elliott published his theory of market behavior in the book The Wave Principle in 1938, summarized it in a series of articles in Financial World magazine in 1939, and covered it most comprehensively in his final major work, Nature’s Laws: The Secret of the Universe in 1946. Elliott stated that "because man is subject to rhythmical procedure, calculations having to do with his activities can be projected far into the future with a justification and certainty heretofore unattainable."