close icon

Riding EURUSD ‘s 1100-Pip Elliott Wave Crash

The way the year began gave EURUSD bulls a lot of reasons to hope for a great 2018. On February 19th, the euro was trading above 1.2400 against the U.S. counterpart, following a phenomenal 2017. Angela Merkel had just successfully negotiated the terms of her fourth mandate as a Chancellor of Germany and Donald Trump’s trade wars were nothing more than a distant and hypothetical threat.

Not anymore. Six months later today, the situation is very different. EURUSD fell to as low as 1.1300 last week, before recovering to close the session at 1.1436. Indeed, six months is a long time in the markets, especially in Forex, where you never actually know what will be the next catalyst to turn things upside down. That is why we do not rely on news, events or other external factors to guide us through the markets. Instead, we prefer the Elliott Wave Principle. Here is why.
EURUSD Elliott Wave chart February 19
This chart was sent to our subscribers on February 19th. It revealed that the rally from 1.0340 to 1.2556 took the shape of a five-wave pattern, called an impulse. The sub-waves of waves 3 and 5 were also clearly visible. Interestingly, the guideline of alternation was kept in mind by the market, as well, since wave 2 was a sideways running flat correction and wave 4 was a sharp pullback.

According to the theory, every impulse is followed by a three-wave correction in the opposite direction. Hence, our negative outlook. Instead of telling us to join the bulls near 1.2400 in February, our Elliott Wave interpretation of EURUSD’s daily chart warned us that a major selloff was just around the corner. Since all the progress achieved by fifth waves is usually fully erased by the negative phase of the cycle, it made sense to prepare for a plunge to at least 1.1500, where the support area of wave 4 was situated. In other words, EURUSD was supposed to lose 900 pips, possibly more. You already know how this story goes, but let’s take a look anyway.
EURUSD Elliott Wave update August 19
The bears took EURUSD by storm. The pair lost over 1100 pips in the past six months after the support near 1.1500 initially slowed the selloff down, but then gave up, too. Everything seems to be going against the Euro now. Analysts at Rabobank even say they expect EURUSD to stay under pressure for another 9 to 12 months due to the European Central Bank’s timid interest rate policy. On the other hand, history has repeatedly shown that the market rarely cares about analysts’ consensus, no matter how strong it may be.

What do the charts suggest about EURUSD’s future? That is the subject of discussion in our next premium analysis due out later TODAY!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Elliott Wave Setup Helps EURUSD Add 325 Pips

EURUSD has been under pressure for over two years now. The pair reached 1.2556 in February 2018, but has been making lower lows and lower highs ever since. Yet, the past couple of weeks painted a different picture. Between May 18th and May 29th, the euro surged 325 pips against the U.S. dollar. In those…

Read More »

EURGBP Pattern Signals Bullish Reversal Ahead

EURGBP has been in free fall since March 19th, when it rose to 0.9500. A month and a half later now, the pair is hovering below 0.8730, down 8% from the peak. Is the downtrend going to continue or should we expect a change of direction? That is the question we hope to answer in…

Read More »

GBPUSD Aiming at 1.30, but May Tumble to 1.21 First

Not long ago, we shared our long-term view of GBPUSD. In our opinion, the down-phase of the pair’s cycle, which is in its 13th year now, is almost over. One last dip to 1.1000 is likely to be followed by a major bearish reversal and the start of the next up-phase. Now, we are going…

Read More »

British Pound ‘s 13-Year Downtrend Almost Over

The thirteen-year period between 2007 and 2020 started with the biggest crisis since the Great Depression and is about to end with the biggest crisis since the Great Depression. Between the two, the longest economic expansion on record took place. And while stock markets around the world reflected that recovery, some currencies have been in…

Read More »

Ahead of the Move: EURUSD Adds 500 Pips in a Week

At the start of last week EURUSD was trading below 1.0700. The pair had fallen from as high as 1.1496 in just two weeks as coronavirus cases in Western Europe kept climbing disturbingly fast. And while fundamental traders had every reason to expect more weakness, the charts were sending a different message. The Elliott Wave…

Read More »

GBPUSD Completes Pattern, Uptrend to Resume

When we last wrote about GBPUSD Britain was still an EU member. Today, that is no longer the case as the country left the Union on January 31st. On the other hand, the pair is roughly unchanged, currently hovering around 1.2900. In fact, GBPUSD has been tracking a classic Elliott Wave pattern. Take a look…

Read More »

GBPUSD To Resume Uptrend Once Correction Ends

The Brexit saga continues as Boris Johnson’s re-election puts Britain firmly on the path of leaving the EU on January 31st 2020. And while the results of the June 2016 referendum caused a crash to 1.1650 by October 2016, GBPUSD is trading near 1.3100 today. The chart below reveals the structure of the recent recovery…

Read More »

More analyses