AynCzubas
Long

Potential Bounce at 1.0818, Rally to 1.18 area in Wave C of 4

FX:EURUSD   Euro Fx/U.S. Dollar
84 14 0
Technically speaking, the triangle (as I had labeled it) has been invalidated by the drop to 1.0807 today. That was a breach of the 1.0818 low, which was the low of wave "a": waves "c" and "e" should not fall below wave "a". However, following the drop to 1.0807, it looks like a converging triangular pattern is still in place. Sometimes, what happens is that what seems to be a perfectly valid symmetrical triangle pattern develops over time and is spoiled by a sudden violation of the "a" low by the "c" or "e", and yet it goes on to form waves until an apex and a subsequent thrust. In those cases, what is realized is that the whole structure up until the point of the violation was itself the "a" wave, and the remaining "b,c,d,e" waves form rapidly thereafter. Whether that is happening here remains to be seen. If it isn't, I suppose I'll need to consider total price action since 6/18 as a "c" of "ABC" instead of "c,d,e" of a triangle view. --7/21/2015

This is a further note to my comment earlier today, which is prompted by price action in the last hour. This may seem contrary to what I noted above, but bear with me. Since the drop to 1.0807, the price did indeed continue in a converging structure until it suddenly burst upward in what was a very clear impulsive pattern. Keep in mind that "e" waves can be triangles themselves. If 1.0807 was the bottom of "e", then it was wave "a" of "e". Since 1.0807, I count a "b", "c", "d" and a final "e" which ended at 1.0819 and immediately preceded the impulse. I am therefore inclined to consider the possibility that this is the first stage of the upward thrust previously forecast. This is to say that regardless of the "e" wave's low extreme having been below the "a" wave of the larger triangle, the fact that the "e" was a triangle which ended above wave "a"'s low is the key point. It seems viable in my opinion, as 4th waves, which are similarly often triangles and which should be limited by the extreme of their corresponding 1st waves do nonetheless quite often cross into the area of the 1st waves but ultimately do not end there. Therefore, I believe we may say that the "e" wave did not ultimately violate the bottom of the larger triangle, as it did not end there; it ended above it at 1.0819. Given this, and given that the price does not drop below 1.0819, we may consider that the triangle is still on track for the original thrust target of 1.18.--7/21/2015

If this is the final "e" wave of a bullish 4th wave triangle, thrust estimate indicates a rally to the 1.18 level. This depends upon price staying above the low of wave "a" which is 1.0818.

Downward thrust from the presumed final bearish triangle of wave "e" suggests a drop to at least 1.0839 before the upturn. I would put a stop loss at 1.0816 on a long trade.
AynCzubas
a year ago
I want to backtrack for a moment to show the longer-term origin leading up to this forecast:

Here is the daily chart (using FX_IDC:EURUSD). Here we see a large multi-year triangle which itself is the "b" wave of a cycle-degree ABC correction. The implied minimum downward thrust measurement for the "c" wave is shown by the yellow vertical line.
snapshot
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AynCzubas AynCzubas
a year ago
In May 2014, the downward thrust began and ultimately took price more or less exactly to the expected thrust target. Generally, a thrust target will correspond to the 3rd wave of the impulse it is part of. In this sequence, I count a 5-wave impulse for the 1st wave of it, a 3-wave correction, and then another 5-wave sequence for the 3rd wave of the thrust.
snapshot
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AynCzubas AynCzubas
a year ago
A common wave relationship is that a wave 3 will be 1.618 of the length of the corresponding wave 1. As you see here, the wave count is supported quite well, as the so-labeled primary degree wave 3 is almost exactly 1.618 of the so-labeled wave 1. Therefore, what is expected next is for price to rise in a corrective 4th wave.
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AynCzubas AynCzubas
a year ago
Now, a 4th wave will be either a 3-wave ABC correction in some form or a triangle (ABCDE) which leads to a 5th wave thrust. In the present case, I believe that the 4th wave is developing as a 3-wave ABC of which the B wave appears to be a triangle. This (B) wave is an ABCDE, of which "e" needs to end at or above the bottom of "a" to maintain this view of B as being a triangle. Assuming it does so, the implied thrust upward for wave C would be near the $1.18 area.
snapshot
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AynCzubas AynCzubas
a year ago
Keeping in mind that a thrust usually corresponds to the extent of the 3rd wave of the impulse it is part of, it seems likely that wave (C) will ultimately go higher than $1.18 after consolidating around that level in its own 4th wave. A 3rd wave generally represents about .786 of the total length of the impulse. As you see here, I have noted where the thrust target would be. It corresponds to right about where wave (C) would be equal to (A) (another common relationship). Furthermore, assuming that the thrust would be 78.6% of the total impulse, it implies that the total height (i.e. 100%) of wave (C) might be above $1.20.

Note that, a 4th wave should not end exceeding the extreme of wave 1. In this case, wave 1's extreme has been assessed as being $1.2498. Also note that the point at which wave (C) would equal 1.618 of wave (A) (again, that common A-to-C relationship) would be just shy of that at about $1.2459.

It is also worthy of noting that the above-mentioned levels also correspond to the 1.382, 1.618 and 2.0 continuous (I call "unbroken") extension levels of the length of wave (A).
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AynCzubas AynCzubas
a year ago
Assuming the thrust up to $1.18 does occur, it is possible that the 4th wave of that impulse will be a triangle which offers more precise information about the final minimum height of the impulse.
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AynCzubas
a year ago
We got the bounce at 1.0819 today. It was followed by an initial impulsive wave up to 1.0863 and is has been correcting in a 3-3-5 style ABC structure. The C wave's 4th wave appears to be targeting about the ending level of the A wave. Ideally, it should not fall below 1.0819, and then there should be a 3rd impulsive wave upward.
snapshot
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AynCzubas AynCzubas
a year ago
snapshot
This is a further note to my comment earlier today, which is prompted by price action in the last hour. This may seem contrary to what I noted above, but bear with me. Since the drop to 1.0807, the price did indeed continue in a converging structure until it suddenly burst upward in what was a very clear impulsive pattern. Keep in mind that "e" waves can be triangles themselves. If 1.0807 was the bottom of "e", then it was wave "a" of "e". Since 1.0807, I count a "b", "c", "d" and a final "e" which ended at 1.0819 and immediately preceded the impulse. I am therefore inclined to consider the possibility that this is the first stage of the upward thrust previously forecast. This is to say that regardless of the "e" wave's low extreme having been below the "a" wave of the larger triangle, the fact that the "e" was a triangle which ended above wave "a"'s low is the key point. It seems viable in my opinion, as 4th waves, which are similarly often triangles and which should be limited by the extreme of their corresponding 1st waves do nonetheless quite often cross into the area of the 1st waves but ultimately do not end there. Therefore, I believe we may say that the "e" wave did not ultimately violate the bottom of the larger triangle, as it did not end there; it ended above it at 1.0819. Given this, and given that the price does not drop below 1.0819, we may consider that the triangle is still on track for the original thrust target of 1.18.--7/21/2015
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AynCzubas AynCzubas
a year ago
I have revised the above-shown count. Please see below.
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AynCzubas AynCzubas
a year ago
I mean the 2nd to last image above was revised. The image immediately above this note is my current view.
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AynCzubas
a year ago
I expect 1.0946 will be an initial point of resistance on the way up to 1.18, due to the lower trendline of the larger triangle and the peaks and troughs of previous price extremes (stalagmites and stalactites) being at that level, as well as the fact that an estimate of the total length of this section of wave extrapolated so far from component waves 1 and 2 also yields that price level.

The total thrust should be a 5-wave impulse. 1.0946 would not be high enough to comprise wave 1 of 5, but perhaps it will ultimately be counted as wave 1 of 1 of 5.
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AynCzubas
a year ago
Since yesterday, 3rd and 4th waves have developed. The 4th wave appears to be targeting 1.1108 (just above the upper trendline of the larger triangle described herein) and looks ready to launch. That would be nearly the top of the 5th wave of this first impulse in the sequence heading toward 1.18.
snapshot
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AynCzubas AynCzubas
a year ago
I was clearly wrong on this idea of spike to 1.1108, at least for right now.
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AynCzubas
a year ago
Over the past week. Euro/USD has jumped as high as 1.1714, nearing my target of 1.18 forecasted one month ago. The parameters of the contracting triangle which portended this spike have slightly changed since then, but not significantly enough to alter the forecast. It appears that the upward thrust has completed a 1st and 2nd wave, may have finished it's 3rd wave (the distance from the bottom of the 2nd wave to 1.1714 was around 161.8% of the 1st wave, a typical 3rd wave target length. This also corresponds neatly to the forecasted thrust-target from the triangle, as a thrust-target typically infers the peak of the 3rd wave of the thrust impulse) and is now consolidating in a 4th wave. A 5th wave to the final peak is therefore expected, following this consolidation.

I would like to add, though, that this post-triangle thrust upward -- being a "C" wave of an "ABC" 4th wave correction of larger degree (the "B" wave was the triangle) -- may have the potential to reach 161.8% of the length of its corresponding "A" wave, which just as for 3rd waves to 1st waves is also a typical proportion for "C" waves to "A" waves. That outcome would presume a final peak for this "C" wave of wave 4 at about 1.2477, which is coincidentally within a hair's breadth of the 4th wave's maximum valid limit of 1.2498 -- the low of the corresponding wave 1 of the decline which began in May of 2014.
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