EURUSD: Beginning the Year And a Bottom Is Near

Happy 2016, everyone! We hope you had a fantastic new year.

As expected the euro moved towards the upside, reached our first target at 1.0896, and exceeded it by 50 pips, completing a contracting triangle of a fourth-wave correction. And as is invariably the case on the completion of a triangle, price should witness a dramatic drop very soon.

We’re updating our counts to reflect the most recent price action and to present tighter targets and invalidation points.

Weekly Main Count
– Invalidation Point: 1.0946
– Confirmation Point: 1.0525
– Downwards Target: 1.0315 – 0.9976
– Wave number: Minor 5
– Wave structure: Motive
– Wave pattern: Impulse

Weekly Alternate Count
– Invalidation Point: 1.0525
– Confirmation Point: 1.1059
– Upwards Target: 1.1302 – 1.1782
– Wave number: Minor C
– Wave structure: Motive
– Wave pattern: Impulse

Big Picture

The bigger picture sees that the euro is moving towards the downside in cycle wave x, which is forming a double zigzag labeled primary waves W, X and Y.

Primary wave Y is forming a zigzag labeled intermediate waves (A), (B) and (C).

Intermediate wave (A) formed an impulse labeled minor waves 1 through 5.

Within it, minor wave 3 reached 261.8% the length of minor wave 1.

Minor wave 5 extended as an impulse labeled minute waves i through v, reaching 161.8% the length of both minor waves 1 and 3.

Intermediate wave (B) formed a double zigzag labeled minor waves W, X and Y, retracing a little less than 38.2% of intermediate wave (A).

Intermediate wave (C) is forming an impulse labeled minor waves 1 through 5, which will complete primary wave Y, and therefore cycle wave x. This will be confirmed by movement below 1.0462.

Main Weekly Wave Count

This main count sees that intermediate wave (C) is forming an impulse labeled minor waves 1 through 5.

Within it, minor wave 2 formed a double combination labeled minute waves w, x and y, retracing a bit over 61.8% of minor wave 1.

Minor wave 3 formed an impulse labeled minute waves i through v.

Within it, minute wave v formed an ending diagonal labeled minuette waves (i) through (v).

Minor wave 4 formed a contracting triangle labeled minute waves a through e, retracing a bit over 38.2% of minor wave 3.

Minor wave 5 is unfolding towards the downside most likely as an impulse labeled minute waves i through v.

This count expects the euro to continue moving towards the downside in minor wave 5. This will be confirmed by movement below 1.0525.

The MACD indicator tentatively supports this count by showing a bearish crossover.

At 1.0315 minor wave 5 would reach 100% the length of minor wave 1, then at 0.9976 it would reach 100% the length of minor wave 3.

This wave count is invalidated by movement above 1.0946 as minute wave ii may not move beyond the start of minute wave i.

Alternate Weekly Wave Count

This alternate count sees that intermediate wave (B) is still unfolding as a flat labeled minor waves A, B and C.

Minor wave A formed a double zigzag labeled minute waves w, x and y.

Minor wave B formed a zigzag labeled minute waves a, b and c, retracing 95% of minor wave A.

Minor wave C is unfolding as an impulse labeled minute waves i through v.

Within it, minute wave ii formed a double zigzag labeled minuette waves (w), (x) and (y), retracing 50% of minute wave i.

This count expects the euro to continue moving towards the upside in minor wave C to complete intermediate wave (B). This will be confirmed by movement above 1.1059.

At 1.1302 minor wave C would reach 61.8% the length of minor wave A, then at 1.1782 it would reach 100% of its length.

This wave count is invalidated by movement below 1.0525 as minute wave ii may not move beyond the start of minute wave i.