ac7777
Long

Potential Euro/USD Post-triangle Thrust Rally Targets

FX:EURUSD   Euro Fx/U.S. Dollar
349 30 5
Background:

In May 2014, a bearish triangle which originated in 2008 concluded at 1.39938, and the thrust measurement therefrom suggested a minimum low of 1.04402 would follow.

In March 2015, Euro             concluded the thrust wave down to 1.04624, almost exactly as prescribed by the triangle. By my count, the thrust represents 3 waves down. Next, an upward 4th wave developed as a triangle correction that ended in October 2015. That triangle provides several successive thrust measurements which should roughly correspond to the extreme high and low points to be reached during the final 5-wave impulsive sequence down.

The first thrust measurement suggested a distance of 0.10009. From the final peak of the triangle, that equated to a low of 1.04942. In fact, the subsequent thrust wave down reached very nearly to that level at an actual 1.05837, which I label as wave (1). Measurements from within the triangle then suggested that the following corrective rallies would peak at about 1.08869 and 1.10097 and then 1.2220 and 1.14119 (or perhaps somewhere between).


Current Wave Action:

As the next expected wave was a wave (2) rally, the above levels would apply to the legs of the wave (2). In reality, a sharp spike first to 1.08930 and then 1.09811 occurred, meeting those levels quite closely. I label that sequence as wave A of (2)

From that point, price has taken the form of a contracting triangle, which I label B of (2). With the exception of what I consider to be a renegade wave E of this triangle, other waves ABC and D have fit within the contracting structure nicely. Wave E itself appears to be ending as a triangle (quite typically) and is struggling to maintain above the level 1.09236 (the bottom of wave C) while completing its own contractions in order to complete above that level, as a prerequisite to completing the triangle as a whole. The wave B triangle's thrust measurement suggests an upward distance of 0.3444. That distance may be assumed to begin from the low extreme of wave B (1.08052) or possibly from the end of wave E which I may assume will be no lower than 1.09236. In either case, the estimated upward minimum thrust for wave C would approximate the range prescribed by the above bearish parent triangle. Likely actual targets would seem to be 1.11405 and 1.12667. In any case, the wave (2) rally in total should not exceed 1.14952, the origin of wave (1).

ac7777
a year ago
Correction: 1.2220 should read 1.12220
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Muscenti
a year ago
Awesome analysis
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ac7777
a year ago
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ac7777 ac7777
a year ago
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ac7777 ac7777
a year ago
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ac7777 ac7777
a year ago
Now deep within the structure of wave E
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ac7777 ac7777
a year ago
The wave E appears to have completed above 1.09236 as predicted, and the first small impulsive wave has formed and now retracing back to the wave Ee trendline, as would be typical.
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ac7777 ac7777
a year ago
Volatility spike. Now wave E will rebuild above 1.09236 before the rally begins.
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ac7777 ac7777
a year ago
I realize now that the wave 'c' of E had not completed. It still had a final impulsive wave 5 down to complete. The reason for the spike was that it was the wave 5 thrust from the wave 4 triangle which was mistaken as the wave E triangle. Now that the downward wave 5 thrust has finished, wave E is complete (or completing) and price has quickly retraced back up above 1.09236 where it should stabilize and then the rally will begin.
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ac7777 ac7777
a year ago
Recount:
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ac7777 ac7777
a year ago
Closeup: Note the 1.09326 level where the wave E returned and stabilized above...
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ac7777
a year ago
The failure to regain and hold the 1.09236 level to complete the bullish wave B triangle was unexpected, even in light of the FOMC announcement.

However, I still expect price to work its way back upward to meet the upper target range prescribed by the parent triangle for wave (2). So far, we have not seen a rally of the kind of length and force characteristic of a C wave. By what mechanism price will rebuild a base for the impulsive jump higher remains to be seen. I will have an update when I think I have identified the pattern.
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ac7777
a year ago
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ac7777 ac7777
a year ago
After some careful inspection of the last day's waves, it is now quite apparent that the contracting triangle I was following within wave B was not intended to trigger the ultimate upward thrust of wave C of (2).

That triangle's objective was merely to force a thrust down to create wave (C) of B. The thrust measurement from that triangle was an undeniably accurate match to the length of the thrust down from the end of wave e, as you see above. At this point, wave (C) of B counts as complete, or nearly so.

This could mean that wave B is ending here. I suspect that wave B will go on to create additional waves C, D and E to form a bullish triangle which will generate the necessary thrust upward to the high target area. In this case, it should stay above the level of wave (A).

Fair warning: Wave 'e' clearly did not stay within the confines of the triangle boundary, although it did return to its proper position below the extreme of wave 'c' before thrust down commenced. I do not expect that any E-type wave will remain controlled by the triangle trendlines except at the very last moment prior to thrust, when it must be aligned properly. Keep this in mind when placing stop losses above or below the wave 'A' of any triangle.
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ac7777
a year ago
If wave (C) ends at or above wave (A)'s low at 1.07962, it increases the likelihood that wave B is still developing as a bullish triangle with this level as its base. In any case, a wave C up of the same magnitude as A and B has not yet occurred and is always required to complete any ABC correction. All other waves since wave A have been otherwise identified.
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ac7777
a year ago
It does look like wave (C) has ended and price has reversed above the low of wave (A) of B, as I suspected it would.

In the main chart above, notice the high targets on the chart represented by the aqua and blue vertical lines (these were gleaned from measurements taken within the wave 4 parent triangle) pointing up at 1.12220 and 1.14119, as well as the 1/2 mark between the two targets at 1.1322.

We may assume for now that the base trendline of the triangle will be that drawn through the bottom points of waves (A) and (C).

Now, see in the chart below that when converging (red) trendlines are drawn based on triangle parameters so far, the estimated upward thrust distance from the vertex of the triangle (a proxy for wave (E) for now) is pointing at almost exactly the same halfway mark between the two high target measurements. This is a very good clue that wave C is inclined to reach that level. So, I think wave (D) and (E) should develop roughly within these parameters to yield roughly that result.

I expect that waves (D) and (E) of B will now develop and complete, more or less, within the estimated parameters shown in red and then the upward thrust of wave C will start.
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ac7777 ac7777
a year ago
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ac7777
a year ago
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I figure that wave (E) is nearly complete and should terminate at a low near 1.085 - 1.084 before the next upward thrust toward 1.12 and beyond begins.
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ac7777 ac7777
a year ago
Correction: the wave (E) is completing its final contracting stage now near the upper (purple) triangle trendline and should thrust very soon.
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ac7777 ac7777
a year ago
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ac7777 ac7777
11 months ago
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It looks as though the price has begun its thrust upward, judging by the sudden gap up (which, naturally, has happened while most average traders are paralyzed to take action on it -- due to the halt on trading for the Christmas holiday). So, who exactly is moving the price, then?

A couple of significant points here: the contracting triangle of wave (E) itself, if assumed as complete by this point, yields its own thrust measurement indicating a rally up to just a hair below the level where it is expected to be limited, if it is indeed wave (2). That level is 1.4952 -- the origin of wave (1). Now, that may end up being the actual height of the rally or merely a symbolic gesture by the market (yes, you read this right) that that will be the ultimate limit for the rally. That level would also equate to halfway between 1.382 and 1.618 the distance of wave 'A' for this wave 'C' from the lowest extreme of 'B'.
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ac7777
10 months ago
This is my updated wave count for the wave 'B' bullish triangle in Euro/USD. Last month's assumption that the triangle had completed was premature. However, the wave structure that has developed since then has maintained a contracting triangular structure with parameters that continue to suggest a thrust up above 1.12, and this looks likely to begin soon.
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. Note how closely the estimated minimum target of this post-triangle thrust matches the measurement taken from within the 4th wave parent triangle for a prospective high (1.12140). The parent triangle also yields a second, higher measurement into the 1.14 area, which I anticipate will follow the rally above 1.12.
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ac7777 ac7777
10 months ago
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It looks like the final (E) wave just needs one more thrust down below 1.08 to complete. Provided the price does not fall below the low of wave (C) at 1.07775, I will consider that a rally will start when wave (E) ends.
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ac7777 ac7777
10 months ago
The thrust to 1.12387 has achieved and exceeded the projected 1.12140 target. Price appears to be consolidating in a smaller contracting triangle now, which suggests still further up to go. I still have reason to anticipate a higher target of 1.141 to be reached before the Euro begins its next major decline toward parity with the Dollar.
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ac7777 ac7777
10 months ago
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ac7777 ac7777
9 months ago
Approaching my target of 1.141, and 1.14952 should be the upper limit of this rally, if this rally is indeed wave (2). I will short with a stop-loss above that price. I expect a decline in a wave (3) down below $1.00 to follow.
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ac7777
9 months ago
A 4th wave triangle now forming should spawn a 5th wave thrust up into the 1.1400s. Please see full details here:
Long to 1.14120-1.14952, then Short to below 1.00
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ac7777
9 months ago
1.3764 was the maximum height for the post-triangle thrust, falling slightly short of my higher target of 1.141.Price has since fallen below the thrust origin, so precluding the expectation for further upward staging within the thrust wave. After a triangle thrust, which is the last wave in a corrective sequence, an impulsive decline would usually be expected to begin. The decline since then to 1.085, though, looks corrective. One plausible explanation for this is that this decline is a type "D" wave within the whole consolidation since March 2015, which I have continuously held as being a 4th wave and, which I now suspect may altogether be a triangle which is only just now nearing completion. It now only requires a final "E" wave up. Assuming this "D" wave is about done, the area of 1.118-1.12 seems a very likely upper target for a wave "E" to peak. That level not only represents a .236 retracement of what I consider to have been the 3rd wave down but also contains a cluster of Fibonacci proportions to preceding waves "A", "B", "C" and "D" (as far as "D" has gone so far). Interestingly, that level is also at exactly the same altitude as where the triangle trendlines converge. Unless this presumed "D" wave lengthens further below 1.085, the would-be triangle yields a thrust measurement of 0.26437. which from the hypothetical thrust origin at the end of wave "E" at about 1.12 would imply a 5th wave decline down to around $0.85-86.
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ac7777
9 months ago
Still consistent with the contracting triangle wave count that I proposed a few days ago (see above), it appears that 1.08255 may have marked the low of wave 'd' down and the wave 'e' rally is now well underway. Wave 'e' will be the final wave up to complete the triangle before the downward post-triangle thrust begins. In the chart above, I had suggested the level right under 1.12 as a likely peak for wave 'e', based on an assumed low of wave 'd' at 1.085. However, since 'd' registered a bit lower and wave 'e' has started to form -- giving some additional clues in its own wave structure -- I can now propose a revised and hopefully more accurate estimate of where 'e' might end:

Type 'e' waves have a 3-wave corrective structure. In this case, I perceive it as a developing zigzag (5-3-5), having begun with a fairly standard-looking 5-wave impulse up labeled wave (a), now being followed by a triangle wave (b) which looks about complete, and therefore a final 5-wave impulse wave (c) should follow as the post-triangle thrust from that wave (b). The (b) wave of 'e' appears to be targeting 1.12340 at minimum. That is very near to the following tight cluster of levels that are significant in terms of Fibonacci proportions of the proposed length of wave 'e' to other waves within the triangle as well as of the length of subwaves (a) and (c) of wave 'e' to one other:

1.12579 = wave 'e' would be .5 the length of 'c'
1.12547 = wave 'e' would be .786 the length of 'd'
1.12564 = wave (c) of 'e' (in other words, the end of 'e') would be 1.618 the length of wave (a) of 'e'

Therefore,I believe there is a very good chance that this triangle is now heading up to its end with wave 'e' ultimately in the range of 1.1256-1.1258 before a major decline in Euro/USD starts.
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ac7777 ac7777
8 months ago
Possibly a setup on the way to 1.1258:
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