In May 2014, a 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 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).
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.
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.
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.
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'.
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.