There is no doubt that USD has caught a bid recently. However, the bigger question is whether it is simply a correction for another leg down or whether this is a start of a new uptrend.
I believe that we will find an answer soon enough. Here is my trading plan:
1. Wait for a correction for Wave 4 (orange). The rectangle box indicates that I expect a similar size correction as Wave 2 (orange). I have placed an entry order at 106.75 with a 30 pip stop loss. The stop loss is based on the idea that wave 4 should not cross into wave 1 territory. If it does, we are not dealing with an impulse up and as such, I will then only take short trades for target much much lower.
2. For now, assuming we are in an impulse, the next leg up (Wave 5 orange) will be truly explosive. This is still party of the Third Wave (Green) and I would expect it to reach 1.618 extension of Wave 1 (Green). That gives us a target of a final target of 109.49.
3. However, the initial target is the upper trend line which is in the vicinity of 2.618 extension of Wave 1 (orange). I will wait and watch to see whether the upper blue channel is breached. If it does, we can have high confidence that we are indeed dealing with an impulse up.
Happy Trading!
Comment
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Mixed signals!!
The line chart shows that wave 4 (Orange) has not traded into the territory of wave 1 (Orange) - albeit by only the tiniest of the margins. However, the drop for wave 4 appears to be in 5 waves rather than 3 waves - and this concerns me as it could be a leading diagonal for a big drop to new lows.
For this reason, I have closed my long trade manually until a clearer signal is generated.
How much importance do you give line chart and how much candlesticks? I am new to Elliott Wave theory (learning from Richard) but i still get confused on this view... can you please explain to me "deviations" which would be considered normal or extreme or no deviations allowed? :)
thank you in advance if you have the time
EnhancedTrading
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WaqasRaja
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@Trevf98, I don't know much about Wolf waves but from a quick Google search and applying the principle to my chart, it nicely ties in with the projected completion area for Wave 5. What do you think? See the snapshot below.
Just for the record, I am a beginner and mostly use Elliot Waves and Elliot Channels for my trading.
thank you in advance if you have the time