EUR/USD Weekly Close: 1.2286
Fri Aug 10 1.2316/1.2240
Thu Aug 9 1.2386/1.2266
Wed Aug 8 1.2401/1.2326
Tue Aug 7 1.2441/1.2375
Pivots: S3: 1.2170; S2: 1.2205; S1: 1.2246; P: 1.2281; R1: 1.2321; R2: 1.2356; R3: 1.2396
EUR/USD: The EUR/USD spent the latter part of the week giving back the gains it made earlier in the week from a high price of 1.2444 on Monday, August 6th. One can almost describe the EURO as being in the doldrums, with declining volatility and Euro weakness seen against most currencies, in particular the EUR/AUD and EUR/CAD commodity crosses. Perhaps European Holiday season is getting in the way of volatility and liquidity. Come September, the market is likely to make a decisive move. That being said, the market is confined in a range until the European markets either reach some stability or the Eurozone crisis worsens.
The price action of the EUR/USD over the last few weeks highlights an uncertain, lackluster market. It is because of this apparent lack of conviction that we anticipate more sideways price action characteristic of Elliott Wave corrections. While the EUR/USD may have completed the ABC correction up to 1.2444, the ensuing drop leads us to believe that the correction hasn’t run out of steam yet and could continue over the next few trading weeks. In fact, the EUR/USD may have reached a corrective swing low at 1.2240 on Friday, with a reversal hammer on the Daily candle. If so, expect the EUR/USD to track higher, while still remaining confined within the corrective upward price channel. The Elliott Wave count also counts the end of a C wave on Friday, which points to at least a move higher to correct the move down from 1.2444 to 1.2240, so that a 50% correction would take us back up to 1.2340. Our preferred count eventually takes us back to the 38.2% retracement level of wave iii black at 1.2556. On the flip side, the EUR/USD becomes very bearish, if it breaks below 1.2200 followed by 1.2110, where at that point, the market will start talking about the EUR/USD revisiting the June 2010 1.1875 lows.
Have a look at our new FXTE service offering – a Trading Room and Wave Counting Service at www.tradingroom-elliottwave.com. Have a great week trading, or take vacation and come back in September!