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EURUSD Bulls Beware - Upside Limited in Every Elliott Wave Scenario

Long term chart

EUR/USD Daily Chart
Larger Image

Short term chart

EUR/USD 30-Minute Chart
Larger Image

My Bias: short in wave 3 blue.

Wave Structure: downward impulse wave 1, 2 blue

Short term wave count: lower in wave iii brown

Long term wave count: lower in wave 3 blue

Important risk events: EUR: N/A. USD: CB Consumer Confidence

This weeks price action in EURUSD was a charachterised by price range contraction, but, given the larger wave count, this should not last long.

EURUSD is caught in an extended minor correction in a possible wave 'ii' brown, going on this weeks trade.

There are a few scenarios, as with every correction.

Scenario 1:

We could be witnessing a flat correction, if so the price will rise to challenge 1.0483 again, before turning down.

Scenario 2:

Or wave ii brown is already complete, and the price is declining in wave iii brown.

Or, Scenario 3:

I have shown another possible wave count, circled in red, on the short term chart which fits the price action as well as the operating wave count. The outcome of all wave counts is the exact same, A large decline is on the cards here, and we are on the cusp of it.

Either way, 1.0353 is critical, if that level gives way, the price could decline quickly. My test short position was stopped out this week, but I will be trying again, possibly next week, if the right opportunity emerges.

The main take away from the current price action is that the combined probability of any significant rally in EURUSD is very small right now. The new year could well herald some serious selling.

 

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