EUR/USD Elliott Wave Top-Down Approach

In this article about the EUR/USD, we will explain the price action through the Elliott Wave theory. We will decipher the cycles to find a projection. The Elliott Wave analysis serves to know the intention of the future price, based on the action of the past price. Because the waves repeat and repeat, it all depends on the interpretation of the analyst to achieve a successful analysis. Let's immerse ourselves in this pair to know details that are not visible to the naked eye, and that are key to an adequate interpretation of the price.

Elliott Wave analysis in EUR / USD

Note that on the weekly chart, the EUR/USD has managed to move 1647 PIPS from high 1.2543 to low 1.0898. The weekly bearish move corresponds to the first Elliott Wave. In this particular case, it's labeled as the wave "i" blue. Highlighted in a blue rectangle on the weekly chart is the cycle for the wave "i" blue.

Everything has a beginning and an end. In the weekly chart, we are facing the last moves of the weekly cycle. An ending diagonal wave appears within the square in a red background. There are five waves in black "i, ii, iii, iv, v." Focus on the wave "iv" black in the four-hour time frame. We are focusing now on finding its end.

Weekly Chart with Elliott Wave Analysis

What happens inside the price?

By decreasing the time frame, we arrive at the 4-hour chart here; the long term information is connected to find the direction and the short term trade. The wave "iv" in black that looked tiny on the weekly chart, on the four-hour chart fills the screen from left to right.

One hundred sixty-four four-hour candles make up this monster. It is an irregular FLAT denoted by the "WXY" waves in red. Fortunately, we are facing the last wave, the wave "Y" in red. Inside it contains three waves an "ABC" zigzag in orange. The orange "C" wave is active, and we await its end between levels 1.1060 and 1.1083. Both objectives result from 78.6% and 88.6% Fibonacci retracements, respectively.

Elliott Wave 4-Hour Chart

Strategy

There are several ways to validate the end of the fourth wave; my two favorites are:

1. The aggressive approach of entering will be when the price shows a reversal in some of the two levels Fibonacci 78.6% (1.1060) or 88.6% (1.1083). Combined with a reverse pattern 123.

2. A conservative and ideal way for those traders who do not have enough time to analyze the market, through a SELL STOP on the 1.1000 support with a stop loss between 30 and 50 pips and target at 1.0880.

TIP: Do not forget, to achieve success using the Elliott Wave principle, use a technical validation to find your trade. Without validation, there is no trade.

Meanwhile in the Dollar Index

An inverse situation happens; the index needs to go down. It is in a red "B" wave; its Fibonacci target is 61.8% (98.22). In an in-depth scenario, it can reach 78.6% (97.93). This chart serves to be able to have your feet on the ground and broadly understand the market. When the Dollar Index marks the reverse, it will serve as technical confirmation to decide to sell the EUR / USD.

Dollar Index Chart 4-hour Elliott Wave EUR / USD

Thanks to the robust Elliott Wave analysis, we can have a clear picture to do our trading, avoiding mistakes, and driving away emotions. I wish you a happy rest of the week and many successes in all your trades.