EURUSD Chart 39

EURUSD - In a Final Leg of Flat
Correction For Bullish Swing

EURUSD – In a final leg of flat correction for bullish swing by DanV on TradingView.com

28 October 2018
Updates and comments

Over all we are in major bearish cycle for EURUSD as per my last chart I published in January 2018 which you can check in the link below.

This trend has developed well so far and it is in a corrective phase since August 2018 low which appears to be developing what Elliott Wave theory refers to as flat correction of 3-3-5 formation.

Rules for Identifying Flat Correction 

To correctly identify a flat correction , it needs to meet the following rules: 

1. Waves “a” and “b” consist of 3 swings each which can be simple zigzags or double zigzags within them. 
2. Wave “b” must retrace wave “a” by at least 90% or more. 
3. If the above are met then wave “c” would develop in 5 waves and it reaches the proximity of peak of wave “b”. There variation of flats but this one is the simplest and one which we can work with for now.

Therefore the flat correction gives clear advantage in trading the wave “c” such as one about to form in EURUSD as follows:

Wave “a” - formed a zigzag from 15th Aug to 24th September.

Wave “b” - from 24th September to 26th October (potentially) which retraced wave “a” more than 90% ( Futures Dec 2018 contract fractionally took out the low of 14th August).

Wave “c” - to commence from 28th or 29th October and likely to complete by Mid - late Nov (approximated using various time symmetries shown on the chart) with target in the proximity of 1.75 – 1.18. We also have declining 200 daily MA around there.

Upon completion of wave “c” the entire flat correction is completed and price resumes the prior trend leading into that correction.

COT Data: Back in March 2018 the Non Commercials were at historic extreme in their Net long. This declined progressively to the point they briefly flipped to the Net Short around Aug low and this turned back to net short again since 24th September and has been growing to close as at 23rd October at Net short of 30,304. This is supportive of possible bounce in context of this flat correction . Please see the chart with COT data below.

Trade Action:

Discretionary Entry could be on price moving above the high of 26th October or adjusted accordingly if we have new lower low early in the week.

Caution: If we do not see 5 wave bullish swing or price seriously breaks below August low then some other pattern is in progress.

Warning: This is my interpretation of price action using TA approach that I consider helps me the most but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views. 

For those who appreciates my analysis, select to follow me and the chart for notification of future updates. Indicate you like my analysis by thumbs up, comments and sharing it with others. If you have an alternative idea then please be constructive and share for all to learn from. 

Thank you for taking the time to read my analysis. 

DanV 

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