EUR/USD Long Term Count

The chart shows my long term count for the EUR/USD movement started from 1985 year. It suggests that it is developing as a zigzag correction with wave B of the zigzag developed as an irregular triangle as is shown on the chart. This count suggests that there should be a complete retracement of wave C of the zigzag for less time than it took to form. In our case this means that if 1.6038 is the end of the potential wave C, the euro should fall at least to 1.1640 till the end of 2010 year. If this scenario comes true, one should expect reverse of the long term trend and beginning and new multi years trend in favor of the US Dollar with long term target at least parity i.e. 1.0000

From shorter term point of view we have an impulsive fall started from 1.6038. It is the first wave of a movement from one higher degree (probably also impulsive in nature) and is close to its end. In such a case from levels close to current ones, one should expect forming of a temporary bottom and beginning of a corrective recovery (probably in the 1.5150 – 1.5500 zone) which should continue at least 2-3 months. I expect later resuming of the sell-off which should be far stronger than the current one started from 1.6038 (the minimum requirement for it should be at least 161.8 % the length of the current sell-off i.e. at least 2 300 pips down should be expected in wave 3). The interesting here is the fact that the expected start of the forthcoming wave 3 down in EUR/USD coincide with the US president elections. The elections are not connected with technical analysis but it is reasonable to except trending movement only after the time when there is a clearness who is the new US president – until then it is more likely to expect sideways movement because of the uncertainty. I gave this coincidence because it is a fact which could confirm the presented count.

Only sharp and fast rise back above 1.6038 will abort the presented count and will signal that a new sequence of record highs should be expected.

Karoll Financial House

This analysis has only informational and educational purpose and does not represent a proposal for buying or selling currency contracts. This report will be updated every Monday, Wednesday and Friday on the next schedule:

• Daily EUR/USD Elliott Wave Outlook - Monday
• Daily GBP/USD Elliott Wave Outlook - Wednesday
• Daily USD/JPY Elliott Wave Outlook - Friday

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