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| The chart for this report is the EURUSD 30 minute. Date range for chart: March 11, 2011 - March 25, 2011 (market closed for the weekend). |
ANALYSIS
March 11 marked the start of a bullish impulse move that has since completed all 5 waves, as defined by the Elliot Wave Principle. If you're not familiar with the principle, a future post will outline the necessary basics. For now, we will note that the impulse move completed all five waves - with the fifth wave adding a 4 wave consolidation pattern identified as a bearish Gartley pattern. Again, those not familiar with harmonic patterns will be relieved to know that I plan to cover the basics in the future as well.
The impulse move is denoted by the purple lines, with each wave's endpoint numbered 1 through 5. After wave 5 ends, the Gartley harmonic pattern is completed, shown by the white triangles at the peak. The Gartley confirms the formation of a wedge started by waves 3-4-5.
The subsequent breakout from the wedge (dotted blue lines), has given rise to three consecutive corrective moves, with wave formation A-B-C. The formation of these market corrections has met resistance with a lower triangle trend line, beginning at wave 1, that has contained market action to the upside. On the other hand, the upper triangle line starts at the peak of wave five, and has successfully contained price action to the downside - marked by several unsuccessful attempts to breakout during the A-B-C corrections.
I expect for prices to be contained within the forming triangle, with a breakout to the downside the most likely. In this case, a break below 1.4053, leading to a break below our entry: 1.4024.
Trade option:
Assuming the above market conditions complete as predicted, a viable short entry can be taken at 1.4024, with your first profit target at 1.3902 in extension. Stop loss should be placed according to your own risk tolerance, with a MAXIMUM distance at ratio 1:1. Until I provide an update, these conditions hold true.
Trade at your own risk, my advice is for educational purposes only for your benefit. Not every trade can be a winner, so please choose correct lot sizes.
