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:

USDJPY Changes Direction Twice in Two Days

It has been a volatile week for USDJPY. The pair started the session on a positive note and rose to 111.76 on Wednesday. However, instead of keeping up the momentum the bulls quickly exhausted their options and allowed the bears to breach the previous swing low at 110.69 and drag USDJPY down to 110.38 on…

Read More »

Emerging Markets Crisis Not to Blame for EURUSD ‘s Drop

Following several very strong days that saw EURUSD appreciate from 1.1300 to 1.1734 between August 15th and 28th, the European currency is under pressure again. The pair is currently hovering under 1.1590 after a decline to 1.1530 yesterday. As usual, it did not take very long for the after-the-fact explanations for the Euro’s weakness to…

Read More »

As USDJPY Plunges, Ralph Elliott is Smiling Somewhere

It has been a wild ride for USDJPY traders last week. The pair opened at 111.31 on Monday and rose to 111.83 on Wednesday before crashing to 110.69 by Friday. It still managed to close the session above the 111.00 mark, but that is hardly a big relief for breakout traders, who thought joining the…

Read More »

Elliott Wave Pattern Sent EURUSD Higher, Not Trump or Cohen

What a week for EURUSD bulls! The pair is moving sharply up after weeks or even months of suffering. After opening at 1.1437 on Monday, the European currency climbed to almost 1.1623 against the U.S. dollar, before retreating to its current whereabouts near 1.1560. It is interesting to note that Donald Trump’s trade war, which…

Read More »

Japanese Yen Refuses to be the Dollar’s Latest Victim

Last week, when most major currencies like the euro, the Canadian dollar and the British pound (not to mention the Turkish lira) fell against the U.S. dollar, one currency managed not only to hold its ground, but to actually gain some against the greenback. The Japanese yen ‘s rise dragged the USDJPY pair down to…

Read More »

Two Months Ahead of EURUSD ‘s Turkey-Driven Selloff

EURUSD’s selloff has resumed. The pair fell to as low as 1.1432 earlier today, following a Financial Times report stating the European Central Bank is concerned about some European banks’ exposure to Turkey’s currency crisis. Spain’s BBVA, Italy’s Unicredit, and France’s BNP Paribas were among the big names mentioned in the report. Now, let’s see how…

Read More »

AUDNZD Gains 500 Pips After Fibonacci Encounter

AUDNZD shot up sharply today, following a statement from the Reserve Bank of New Zealand that cemented the country’s interest rate at its current level for the foreseeable future. The pair was trading below the 1.1000 mark before the announcement, but rose to 1.1175 shortly after it. However, if you have been following our publications…

Read More »

More analyses