Now we have long awaited low formed in December 2015 just above March 2015 low, which could prove to be higher low of the cycle
Looking at the price actions since March low to recent December 2015 low it appears very interesting as follow:
1. From March Low to August high we note a clear 3 swings move shown in GREEN.
2. Similarly, from August high to December low also appear to have a 3 swings to the downside show in GREEN.
4. The final part of the swing down to Dec low was clear with accompanied momentum divergence on H4.
3. The December low formed at just below of the move up from March to August.
The above observations, if correct, suggests that we have a potential which according to principle is formed by 3-3-5 (a-b-c) formation where wave B needs to retrace around 90% of prior wave A and both waves A & B should have 3 swings each, hence meeting the criteria.
If the interpretation is correct, then what should develop now is a 5 wave impulsive move to the upside, which could at least retest August high or even make new higher high.
Of the 5 wave it appears we have already completed wave 1 and retracement wave 2, and could be in very early stage of wave 3 in progress which should be quite strong.
Summary: Therefore, we could consider 2 possible entries
1. The ideal one is that we can get pullback to enter around 1.08 or better and is a preferred entry.
2. If it don't get a pull back to 1.08 level then use a smaller time frame to confirm entry or wait till we have a breakout above 1.1.
In both cases the initial stops could be just below 1.07 which is invalidation level, however, it might need to be reviewed as trade could still materialise provided we hold above December low.
We might stay in this range for few days but also supports EURUSD gaining noticeably commencing from late Jan to early Feb
Warning: This is my interpretation of price action using TA approach that I consider helps me the most but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views.
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