2017 has been a great year for EURUSD bulls. During the last twelve months, the pair climbed from as low as 1.0340 to almost 1.2100 and managed to finish the year above the 1.20 mark for the first time since 2014. It was not a sure shot, though, especially during the mid-December dip to below 1.1720, which forced a number of bulls out of their long positions.
But uncertainty is every trader’s inescapable companion and even when a trading setup cannot be found, it is always better to know what to expect. The following Elliott Wave count first emerged as an alternative scenario (the primary one was also bullish) in the EURUSD analysis we sent to subscribers before the market opened on December 4th, 2017.
As visible, we assumed EURUSD could decline to the support area near 1.1700, before going up again. The reason for this was the fact that the decline from 1.2092 to 1.1554 was a (w)-(x)-(y) double zig-zag correction in wave 4. According to the theory, once a correction is over, the larger trend resumes. On the other hand, the recovery from 1.1554 to 1.1896 was a also a three-wave sequence. The most probable explanation was that wave 5 was developing as an ending diagonal. So, it made sense to prepare for more weakness in wave (ii), followed by another rally in wave (iii) of 5, as long as 1.1554 remained intact. Two weeks later, by December 18th, this count was no longer an alternative one.
EURUSD touched 1.1717 on December 12th and jumped sharply up, which confirmed the bullish idea and allowed us to move the invalidation level from 1.1554 up to 1.1717, providing a trading setup with an excellent risk/reward ratio. Already in 2018, here is how the situation has been developing during the last two weeks.
The Euro started climbing right away and 1.1717 was never in danger, so the 30-pip risk did not materialize. The 200+ pip profit potential, on the other hand, did, as EURUSD exceeded the 1.2000 mark on the last trading day of 2017. It is hard to tell what would 2018 bring, but with the Elliott Wave principle on their side, traders are one step ahead of the pack.
Happy New Year !
