Elliott wave analysis of the week - January 10 2010

This count has been rejected. No trade based on this analysis.

This is the same chart along with my “idealized” impulse wave from the second article of my new series, Faces of Waves Illustrated.


EURUSD seems to have finished the first wave of the black 3 wave on Friday morning. The US payroll report that followed was much worse than the market’s expectations, and it sent US dollar lower and Euro higher.

The previous high, or the end point of the black 2 wave was 1.4447, and this resistance should be kept unbroken in order for my Euro bearish count to be intact.

Although EURUSD came very close to 1.4447 in terms of the price level, the price action shown in this chart is clearly non-impulse. It’s a bit hard to see whether this is a zigzag or flat, but either way, I am betting on EURUSD to break down terribly from here in the next week riding on purple 5 wave that should reach down 1.4150 or possibly 1.3950. (This estimate has not really changed from last week’s analysis.)

Yet, I have not entered to short position. The short term trend from Friday morning is up though it is a corrective wave, and I never argue with trend.

Catching the top to short is not important in trading at all, and it is rather costly. It is clever to wait until any obstacle for EURUSD to go down, and trade on least resistance.

So, I set stop selling order at 1.4380, meaning my short position will be triggered once 1.4380 breaks down. Once I enter this short position, my loss cut level is 1.4450.

In this trade, I am risking only 70pips while the estimated reward is at least 230 pips, and possibly 430 pips.

Sounds like a great bet.

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