EURUSD took a hard hit after the British referendum results showed Britain wants to leave the European union. The pair plummeted from 1.1427 to as low as 1.0911 in a matter of hours on June 24th. After recovering to 1.1185, the exchange rate started declining again. A month after the referendum, it fell to 1.0951 and everyone thought it is just a matter of time before we see a new low. However, the Elliott Wave Principle allowed us to see things in a different light. We, in turn, sent the following analysis to our premium clients on Monday, July 25th, before the markets opened.(some of the marks have been removed for this article)
As visible, the Wave principle suggested that instead of more weakness, we should expect a significant recovery in EURUSD. The chart even provided us with a specific invalidation level at 1.0910. With first targets above 1.1200 and only 40-50 pips at stake, the situation was offering a trading opportunity with an extremely good risk/reward ratio. Less than two trading weeks later, the next chart shows how EURUSD has been developing since the forecast.
EURUSD began rising right away. The critical level of 1.0910 remained in tact, so when the pair climbed to 1.1233 yesterday, our premium clients could walk away with a gain of about 280 pips. The ability to predict market reversals is not the Elliott Wave principle’s only advantage. Maybe even more valuable is that it allows us to identify specific price levels, which serve as a road map and, if breached, would let us know we were wrong. As EURUSD demonstrated, as long as the invalidation level holds, the odds are still in you favor.
What to expect from now on? What is the bigger picture saying? Is EURUSD going to continue even higher or the resistance near 1.1230 would turn out to be too strong for the bulls to breach? Prepare yourself for whatever is coming. Order your Elliott Wave analysis due out every Monday at our Premium Forecasts section. Stay ahead of the news in any market with the Elliott Wave principle.
