This article is not about how the market will react after today’s news. It is about how it is most likely to react, according to the Elliott Wave Principle.
“Wave V does not seem to be over yet. In order to be completed, it has to be a regular impulse or an ending diagonal. So far, it is none of the above. That is why we anticipate more new lows ahead before the corrective rally begins.” This excerpt is taken from an article, called “EURUSD Three Weeks Ahead of The News”, which we published on November 1st. EURUSD was trading around 1.2520 back then. Here is how it looked like on a chart:
Yesterday, more than a month later, the pair fell to 1.2280. Obviously, that is a new low, so this part of the forecast is fulfilled. What about the other part – a regular impulse or an ending diagonal? If we take a look at EURUSD now, it appears it is going to be the latter.
Fact is, that wave V does not look like a normal five-wave impulse. Due to its shape and overlapping wave structure, the assumption for a diagonal seems to be much more appropriate. Let’s see a smaller time frame chart, which could tell us at what stage of development the diagonal currently is.
Wave 5 of V appears to be under construction right now. If this is the correct count, we should see a new bottom, probably in the zone around 1.2250-60. Despite that, the bears on EURUSD are not advised to get overexcited, because a reversal to the upside could be just around the corner.
You probably know, that later today there will be a Eurozone GDP report and a US nonfarm payrolls report. The latter is considered to be so important, that some traders do not touch the mouse of the computer until the first Friday of the month. We do not know what surprises these reports could bring. In fact, we do not need to know, because there is a big difference between the data and the market’s reaction to it. The market speaks through the price charts. That is where we should be looking for a hint before the news is out.
