The Club!

EU

volume profile long term distribution

3303 +/-9 pips seems to be the strongest target

I use only 2 rules from wave 5 ...

Wave 5 = 0.618 ext. of 1-3

OR

Wave 5 = Wave 1

With somerules about RSI divergences on wave 3 and wave 5 ... all this with equal legs or 1.236 ext. of high degree TF movement ... and cycle done ... next cycle please ... X)

Yes, i was thinking that it will go higher due to this setup, which it failed once 3414 was taken.

Awesome. Really liking this!

Cracked the 1.33580 and closed under on all lower time frames till daily. But daily can close above it, the chances are growing. Closing above 1.33654 (the last h4 bear candle's open price) would be the first part of the second trap in my view (first:bull trap, second:extended bear trap).
The cleaning of bulls has been completed, it gives green light to crack 1.34500 and clean the short stops.

Of course it's just an opinion, not a fact, trade safe!

Cheers!

Yep its possibility.

Over the course of the last few days there have been frequently discussions or questions regarding the nature of the waves down form the 3993 top.

Some even suggested that it is kind of wishful thinking or "Schönzählen" (Schickeria).

Today I got a new question from our comrade "Sixer", arguing, that from a cycle point of view, as well as wave structure, the move down seems to be corrective in nature.


Well, let us analyze step by step:


A) the wave down from 3993 to 3503

B) the wave down from 3700 to the recent low



3933 to 3503

this wave down is open to various interpretation.

My main count shows it as impulse, where the subwave 5 of this impulse is an ending diagonal.

In this case the wave 3 is 123,6% wave 1, and the wave 5 is a 61.8% of wave 1 to 3 or a 114,6% of wave 3

The subwave 5, which comes as ending diagonal, shows clearly overlapping behaviour.

Here is the count:




Questions arose due to the fact, that we do not see a clear wave 2 retrace. Remember: the retracement-guidelines in EW are no rules. They are simple guidelines. The only rule for a wave 2 is, that it can only retrace up to 100% but not more.

As Swannel in his great work already showed, the retracements of wave 2s span over a wide variety.

Here is the one for commodities (short term falling impulse; ratio of wave 1/wave 2) (currencies are thought to behave more like commodities than as stocks)



One can see, that his analysis also showed retracements from under 10%. In my count the wave 2 retracement is around 6%


Question is: is a so small retracement really a wave 2 retracement, and what might cause such a behaviour?

Answer is: the higher the pressure is, the smaller (or skewed) the retracements get. When supply and demand are in complete imbalance, such moves can happen. Especially when we had a phase before, where the supply was being totally consumed. Right before the top we had a triangle and then a kind of tiny wave C impulse thereafter. There was no room left to the upper side, so price collapsed very fast. That can lead to structures, where we sometimes can not really see the wave structures with deeper wave 2's we would like to see.

Recently I have seen some guidelines for EW on some blogs, where the author concluded, that a wave 2 usually runs 61,8%. I really think that such guidelines are a complete hogwash. When you have worked long enough with EW you will see wave 2's retracing only very small or also nearly 100%.

Do not fall for some fib-numbers. Fib-numbers are many and we can not determine with high probability which one will be the one for retracement or reversal.

As shown on the first chart, the Awesome Oscillator shows the most momentum at wave 3, shows return to the zero line at wave 4, and a divergent low at wave 5.


Another interpretation of this wave down is the following:

first an impulse down, also with a tiny subwave 2. After this impulse down, a somewhat bigger wave 2 up, and then another wave 1 down, which enfolds as leading diagonal.

The cons for this count are, that leading diagonals are very seldom, and most of the time not 3-3-3-3-3, but 5-3-5-3-5, where the wave 1 and 4 overlap.
In this case here we have a 3-3-3-3-3 structure. Also the wave 3 in this case does not look very convincing, because it looks more like an ABC than as an impulse. Only on smaller TF we are able to count it as impulse.

So this count is less likely.




Another interpretation is, that the whole sequence down started with multiple 1-2 moves

1-2, 1-2, 1-2-3-4-5 (3)-4-5 ((3))-1-2-3-4-5 (ending diagonal 5)

This count is also very good, because through its 1-2 moves, the wave 2's have somewhat more retracement, also it shows very good the nature of a market, which supply suddenly was dry, or where the buy -side demanded much lower prices.


From a fundamental aspect, we clearly have to notice here, that there was a change in the tone of the ECB and the FED. The FED showed hawkish behaviour, the ECB announced doveish behaviour.


Some asked, if the move down from the 3993 top to the 3503 bottom could not be an ABC, a double or even triple ABC. Here I may hint you to the phantastic work of Glenn Neely, who showed, that zigzags most of the time do channel exceptionally well. I can not see that here


3700 to the recent low

So far, the wave down seems to be near the end or already finished. We clearly see waning momentum on the TF's 4h and less.

Question is: is this wave down the wave 3, or only the subwave 1 of a big wave 3?

Answer is: since the momentum right now is not as high as in wave 1, I would suggest to treat this wave down as a subwave 1 of wave 3 (until we see otherwise)

In this case, the following wave 3 would have a good chance to run into the vicinity of 1,29-1,27, when the wave 2 retraces back to the 3550 area



As one can clearly see here, the structure is nicely impulsive. Only the pink wave 5 is debatable, because it looks like an ABC. But maybe wave pink 5 ended a bit higher, and the following wave 4 unfolded as an ABC-flat.


Question: might this wave down not the C wave of an ABC move down from the top at 3993?

Answer: maybe, but most likely not, because C-waves most of the time show bigger momentum that the A wave. And so far the moves do not channel. Right now the wave C would be 76,4% of wave A, which would be OK, too.

hahahah, now the bulls have fooled the bears. I bet many have bet on the 330x area. Maybe the bulls decided to turn ship beforehand

EU EW count by Horvat

http://www.fxstreet.com/analysis/ell...er/2014/08/06/

Close above 3388 is bullish for first target 3408, then possibly higher.

Lest not forget Fukushima

http://www.zerohedge.com/sites/defau.../picture-5.jpg
Three Years later, Japan Finally Tells The Truth: More Fuel Melted At Fukushima

would it be not sooooo sad, one could laugh in the face of the Saudis and the USA


http://www.zerohedge.com/sites/defau.../picture-5.jpg
ISIS Marches On (And The Saudis Are Getting Nervous)

closing remarks of the article:

What the hell is going on we wonder? Is it something in the air? Note that all of this is happening with stock markets still fairly close to their recent all time highs. If the markets decline from here, it will signal a worsening social mood, which as a rule tends to invite even more war.

Daily candle closed above 1.33580 and 1.33654. Good signs my friends.

http://www.dailymail.co.uk/news/arti...rs-camera.html

http://prntscr.com/4aeg8v

Agree, good analysis...sl of buys will be cleared before heading up imo...
That can give a good entry point with good Risk:Reward ratio. New low would invalidate the bull setup, so the closer we can buy to the bottom -> smaller risk/bigger reward.
Totally worth it imo.

Have a good day!

Edit:
imo Mario will talk up the pair, but even if he wants it lower, there will be a long run till ~1.34190 before turning down.

Got stoped out on BE SL on this trade, it worked nicely though.

Looking at DAX and Gold seems like NATO is running the markets lately. Both SP and DAX were battered, lets see if this can start down trend on DAX especially. But first looks like we are going to pick some bounce first.

Daily close above 1.33580, while there was no new low. Getting interesting...