EURUSD - weekend review

This weekend is perhaps a little special for me. If you spend some time around the twitter and blog world, you generally find certain Elliott Wave themes making the rounds, for good or for bad. Whether or not they end up being right, there is usually a definiteness about them and may cause the less initiated to assume they might be bankable. I am no Elliott Waver in my own opinion, but of late, have vacillated between trying to ignore counting completely and then realizing that my own counts are reasonable attempts in their own right - it is the 'not bankable ' bit that continues to bother me. That is, attempting to storyboard the market by Elliott Wave principles is one thing, expecting those attempts to keep you safe whilst trading is another! The special bit for me however, is the acceptance you can keep matters flexible enough not to have to beat yourself up when matters do not follow your counts, but know enough about the Principle to be able to adapt. This requires separating out the 'analysis' from the 'trading'. Anyhow, enough waffle.

The Count

 On the monthly chart, I have marked out the two obvious diagonal patterns trying to assert themselves in this corrective market. The MMA Wave is compressed but still bullish, with price right at the dotted UTL and the green FLD. The FLD is the 'half cycle shifted MA' of 1/4 of the waves trend cycle. My eye is drawn to that one month momentum study in the sub chart - on its own, it is a blunt instrument of course, but with that price placement, perhaps intuitive..

The weekly momentum study has now put in negative divergence and quite clearly the multiple study should be looking to move down into a nested low, as marked by the pink box. The bottom of the dashed triangle looks an obvious target, but this is long term storyboarding with the green FLD, the initial goal of any nested move, at about 1.3100. For now, the MMA Wave is still turning up, but prior turns at highs in this correction suggest this maybe a lagging comment!

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 The daily momentum study has reached oversold, just as price was testing the LTL of my proposed contracting diagonal. Price is also holding above the green FLD thus far and the MMA Wave is bullish. However,  price action of late has been under the 200day rolling regression median and in the middle of the price envelope. Certainly no place to get over excited about buying the market. In addition, it does look like the daily momentum study should be looking to nest (see pink boxes for timing) and if that is the case, then my expanding diagonal alternative with a lower 'D', near the bottom LTL of both the regression channel up from 1.2041 and the price envelope, may in fact be what is happening.

 I have replicated this alternative count on the 4hr Cyclic Phasing chart, with the red 'C' in the left hand corner. Now I am not going to get caught up in 'buts' - we may be in the 'C' leg down in 'red 'D' already, having just put in the 'a' of 'C' which took the form of an irregular or expanded flat. Because of the contracting diagonal LTL bounce, I think we will see a choppy 'b of C' to work off oversold daily chart and frustrate bulls and bears alike. The 80day low is due at the end of March and for now the MMA Wave which is the 80day trend is turning down but needs the choppy price action to keep it coming whilst that oversold status is worked off. We are just seeing a 20day and 40 day low, but the respective FLDs could hold price up if the market wanted it too - maybe a slog of a triangle coming up?

The 1 hour chart looks at that expanded flat in detail and suggests we may have just seen the 'a of b' complete Friday night. Price is still under the 20day FLD, which I said would be the target all week, so there may be a little extra to work off uphill, but I am looking for a deep 'b of b' and then a run up in 'c of b' over the next week or so. anything directly uphill on Monday and this count is immediately blown.


The Trading Charts

I am using Range Bar studies for the trading screens as the shorter term 'waves' are crisper and provide for more definitive fractal assumptions to be made. That is to say, to achieve a 36 pip range bar requires a bullish or bearish accumulation of lesser pip ranges and by monitoring different combinations of range bar sizes, the studies provide confidence.

 36 Pip: The overbought momentum cluster and price action at the bottom of the price channel called for some sort of relief. However, the MMA Wave is caught between falling or not, and with price under the FLD, careful attention needs to be given to the ongoing direction on lower ranges. There is of course plenty of room in the envelope for price to rise but the proximity of that annual pivot has got to be choking the bulls.

 12 Pip: Price action Friday has a contracting diagonal working its way up the price envelope, after what looked like a 3 wave move and led me to rework my count above. The 12 pip envelope is 100 pips wide and fits the EURUSD vibration I think, so this is the scale I take my set ups from. The MMA Wave is turning up and if it is to hold, I want to buy at the bottom of the envelope with the green FLD holding price action and a momentum cluster making a nested low. So, not here! I closed my longs Friday and hope to ride my shorts down for a bit. If I am lucky, a 'b' wave might retest Friday's low or maybe Thursday's, which would provide some time space for the 36 pip envelope to have a double bottom. If anything more happens, well great.

 6 pip: This then starts to get to fine tuning the entries and monitoring the trades. The MMA Wave is still bullish at half the size of the 12 pip chart, and the FLD sits nicely at the bottom of the price envelope. The momentum study looks like it could nest just in the right place for a 'buy' but that would likely see the contacting diagonal busted by then. I'd be hoping for the low on this scale push through the FLD and roll the MMA Wave over, but another high in the diagonal may happen, but it is still not a buy for me up here.

 3 Pip: The MMA Wave just gave up Friday and moved into a correction. Nothing to tell from this to add to the above until market opens, but when I do buy again, I'd be looking for an combined envelope lows on this, the 6 pip and the 12 pip charts, with nested lows on all three momentum studies and either a prior day low and/or daily pivot as cover for the stop. If that fits in with my 'b of b' wave low, moving into a 'c of b' wave, then fantastic. I do think Elliott & Hurst would have approved!!