EUR/USD Absorbs Economic, Trade War And G-7 News
EWM Interactive | Sep 01, 2019 01:44AM ET
EUR/USD made a new low last week. The pair fell to as low as 1.0963 on Friday adding to the downtrend it has been trading in since February 2018. The last time the European currency traded this low against the greenback was in May 2017.
The last few months have been characterized by new lows, low volatility and plenty of overlaps in the price structure. All these features plus our analysis of EUR/USD’s bigger time-frames made us think about one specific Elliott Wave pattern. Take a look at it below.
Our subscribers received this chart on July 29th, while EUR/USD was hovering around 1.1130. The slow and choppy price action led us to the idea that a contracting ending diagonal pattern was most likely under construction.
Within an ending diagonal, every wave takes the shape of a corrective pattern, usually of the zigzags family. In EUR/USD’s case, wave 1 was a w-x-y-x-z triple zigzag, while waves 2 and 3 looked more like simple a-b-c zigzags. The problem was waves 4 and 5 were still missing a month ago.
EUR/USD Ignores the Noise, Focuses on the Elliott Wave Pattern
So we though that once wave v of “c” completes wave 3, a notable recovery in wave 4 should be expected. Then the bears would need to make a new low near 1.1000 in wave 5 in order to complete the entire diagonal pattern. Over a month later today, we can now see how things played out.
Wave v of “c” of 3 dragged EUR/USD down to 1.1027 on August first. Five days later, the pair touched 1.1250 in wave 4 before heading down in wave 5 to 1.0963 so far.
There has been plenty of market-related news during the past month. There were all kinds economic reports from both Europe and the U.S., not to mention the escalation of the trade war and the G-7 meeting.
Get The News You Want
And while the outcome of all these was entirely unpredictable, EUR/USD’s behavior, it turns out, could be predicted with the help of the Elliott Wave principle. The market was forming a pattern and the news coming out at the time was quickly absorbed by that pattern.
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.