The EUR/USD pair is trading at 1.3693, and over the course of the last two trading sessions, price has behaved in a bullish trend. This illustrates the importance of waiting for validations from the market before making decisions, so that the patience of the trader is put to the test during these deep retracements. For day traders opportunities have no limits during the bullish move, while swing traders have been testing their patience for the perfect moment to enter the market. Elliott Wave is an excellent tool to understand the movements and create a map with scenarios of friendly and safe routes for your trades and money, but Elliott Wave does not provide you with the entry point as such. To find the entry in the market you need to apply an End of Trend technique, and this means identifying the end of the active wave. Everything is a game of action and reaction, where the winners will be those who manage to learn to identify the market trend changes. This logic is exactly the same for any time frame and financial market.
In the daily and 4-hour chart we have been suggesting that the active wave is the black “ii”, and we have been suggesting the following targets: 1.3575 (50% of first wave retracement) and then 1.3635 (61.8%). These levels do not mean reverse signals but are simply market resistance levels. In our opinion price will not hold above current price levels of 1.3700, since the upward trend shows fatigue and weakness even in less than 15-minute time frames. Regardless of the next cycle in the medium term, we need to see either a retracement of the current bullish movement or a change of trend. By now both daily and swing traders must be open to the potential bullish cycle change, and be attentive to the following levels:
1. Breakdown of price through the magenta-colored trend line.
2. Price breakdown below horizontal support at 1.3627.
3. The red trend line breakdown.
4. The black trend line breakdown.
5. Counting bearish impulses and 3 wave restracements.
Steps 1 to 4 are in order from higher risk to lower risk, i.e. the first confirmation will be the most risky but brings greater reward and the last confirmation will be the least risky but with less benefit. This is where you as an independent trader must have a strategy that will balance risk and reward according to the risk profile of your trading capital to achieve the returns established in the trading plan.
In conclusion, we still believe that the market is in a wave “ii” black ending soon, and its end will bring opportunities for all types of traders. Day traders can continue taking entries according to their strategy while the swing traders must wait a little longer to enter the market or begin to close the long trades. Have a great weekend and many successes.
Jody Samuels and Juan Maldonado
4 Hour Chart