Multiple Elliott Wave patterns are lining up that suggest EURUSD may fall towards 1.0750.
1) In the context of a medium term bull trend, an a-b-c expanded flat from Dec 3 points to 'c' of 2 to 1.0750, then a larger bull run kicking off
2) A wave 4 triangle suggests this move from Dec 3 to Dec 9 was 'a' of a triangle. 'b' of a triangle likely presses towards 1.05-1.06.
Much above 1.1048 and these shorter term patterns are hampered and see the December 4 post for a medium term analysis.
Keep a close eye on the Speculative Sentiment Index. It is a contrarian indicator and if begins to run lower than -2.0, then that might suggests this short term view isn't going to happen. It is currently printing at -1.6. You can follow real time S S I here.
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EURUSD is still hanging out in the upper portion of the range. Real time Sentiment is holding near -1.48 goo.gl/B7HU4a . 1.1090 is the key level for bears and we can turn bullish there.
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The wave picture has muddied a bit. We've fallen as anticipated, but the clarity of do we move in bullish or bearish fashion isn't as clear.
There is some minor support in this area (currently price is printing 1.0720).
Sentiment is growing more bullish which isn't good for a bullish trader. Current Sentiment reading is +1.1. Perhaps wait for resistance trend lines or horizontal resistance to break prior to testing bullish waters.
Indeed - similar outcomes. Thank you for sharing Kopparam.
stevendave
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I love your work keep it up. One question I am adopting the Elliott Wave principle to trade. I was going to do backtesting. Did you do backtesting when you was starting out with EW? Another question is regards to stop loss placement I am aware of where the SL levels are with EW trade setups but do you take into consideration ATR values or anything ? or do you just place the stop loss as an Elliotician for example in a ending diagonal you may place it after wave 5 or when wave 5 is longer than wave 3 etc ?
JWagnerFXTrader
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Good question - I started with the higher probability ratios that could 'bail' me out if I'm wrong.
For example, wave 2 typically retraces 50-78% of wave 1. Well, if I enter near the 61-78% retracement area, place my stop loss below the start of the supposed wave 1, then even if price only makes it to the price area of the end of wave 1, I have a 1.5-3x reward to risk ratio.
This assumes only getting to the recent swing high. If it is a wave 3 higher, then, even higher levels exist.
So bottom line, there are certain areas in the wave count where good RR ratios exist and I preserve the capital for those moments.
stevendave
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Thanks for sharing!!! Yes I have been looking at these ways to have the highest R:R
bekirdur
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It is really interesting but confusing to see many wave analyzers come up with different wave counts. I've seen 6 different wave count theories from different people :) Thankfully some of them brings the same result in the short term...
JWagnerFXTrader
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Valid point - EW is probabilistic in that we never know what will happen...however we identify what won't happen. Said another way, anything is possible until it breaks one of Elliott's rules. Taking it a step further, the waves and patterns have behaviors, characteristics, or tendencies. For those guidelines, the waves tend to follow, but they are NOT rules and don't have to be adhered to.
What you are seeing with the 6 different counts are people's interpretations of the guidelines. If each of the 6 counts haven't broken any rules, then they are still possible. Some of the counts are going to be higher probability, but even the lower probability counts are still possible.
In the end, you hit on a SUPER IMPORTANT concept..."Thankfully some of them brings the same result in the short term..."
If there are multiple counts that point in the same direction, it becomes a trading opportunity. We can sort which was the wave count later.
That concept was the genesis of this EURUSD post...there are both medium term bullish and medium term bearish counts that point to a shorter term sell off. Therefore, a good risk to reward ratio exists towards 1.0750. That doesn't mean it will work out as profitable, but the risk to reward ratio is strong enough such that I can be wrong more than I'm right and still have a chance to grow the account. I don't know about you...but I'm wrong a lot and appreciate that grace!
EnigmaFX
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Thanks for sharing, i admire you work. Good job.
JWagnerFXTrader
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Your welcome Enigma...it is a pleasure to hear from you.