EUR/USD Medium Term Elliott Wave Analysis

My working count suggests that a triple corrective combination is developing from 0.8563 (February 2002). Currently we are in the end of its third phase presented on the chart. I think it is developing as a flat correction with and the last up-move is wave (C) of it. My count suggests that this wave (C) is a terminal impulse (ending diagonal) which should finish around current levels. When it is over, the whole triple corrective combination started from February 2002 will have a completed structure and in such a case we should see a long term reversal with a potential target parity in coming years i.e. 1.0000. A first signal for such an idea will be a fall below the trendline 2-4 shown on the chart and confirmation – a fall below 1.2940 (the beginning of wave 5 of the terminal impulse shown on the chart). If this happens, one should expect a sharp sell-off to 1.1824 (the starting point of the terminal impulse) and much lower thereafter. Although this idea will be aborted theoretically only above 1.3825 (at this level wave 3 will become the shortest wave which is impossible), I think that the key resistance here is 1.3664. A rise above it will reject the presented very bearish idea and will force me to look for an alternative count. However as long as the euro stays below 1.3664, I will favor the long term reversal idea from the current levels.

Karoll Financial House

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