Weekly analysis: EUR/USD, S&P 500, and Crude Oil with institutional and Elliott Wave theory [Video]

Macroeconomic Context: Interpreting Liquidity in Complex Environments

In environments of macroeconomic uncertainty, most traders make the mistake of attempting to predict the future. However, the professional approach doesn't lie in guessing, but in interpreting what institutional liquidity is showing in real-time.

Current Market Factors

The current scenario combines several critical elements:

• Changes in trade policy at judicial decision levels and tariff adjustments
• Interest rates are declining, putting downward pressure on the dollar
• Relatively low volatility, reflecting indecision but also certain structural calm
• Stable Smart Money positioning is a signal of tranquility requiring close monitoring

This set of factors enables the construction of a clear operational framework: while many traders seek sensationalist headlines, the professional focus centers on how institutional liquidity is repositioning and what implications this has for major assets.

EURUSD: Bullish Wave 3 Scenario with Prior Pullback

Foundation of Bullish Bias

Declining interest rates tend to weaken the dollar, creating a favorable scenario for EURUSD. However, this bullish bias doesn't imply straight-line movement. Integration of Elliott Wave theory with institutional liquidity analysis provides the complete framework.

Technical Outlook

Probable structure:

• Projected bullish wave 3 scenario
• Possible leading diagonal formation in wave 1
• Potential bearish deepening before the main impulsive leg

This structure implies that even within a bullish context, price can produce significant deep corrections.

Operational Opportunities

Dual tactical approach:

1. Intraday shorts on small timeframes while liquidity maintains a bearish bias
2. Preparation for longs on the pullback, when liquidity shifts bias

Critical Levels and Liquidity Analysis

Zones like the 1.1770–1.1760 region represent potential areas where price could:

• Complete a corrective wave (wave 2)
• Make only an intermediate pullback before continuing higher

Critical operational principle:

Rather than attempting to predict whether the price will reach exactly one specific level, the professional approach consists of:

• Stop predicting and shift to reading liquidity in real-time
• Verify at each potential zone if liquidity is ready for the bullish turn

With this approach, dependence on a single rigid scenario disappears. Liquidity will indicate whether the turn begins at the first level, the second, or even earlier, enabling more precise action and reducing unnecessary trades.

S&P 500: Intraday Bearish Bias Within Bullish Structure

Reconciling Opposing Timeframes

In the long-term perspective, the S&P 500 maintains a bullish structure. However, for day traders or swing traders, the objective isn't to capture the entire cycle but to capture fractions of the cycle with favorable risk/reward ratios.

Current Operational Context

Environmental characteristics:

• Bearish correction in progress
• Potentially volatile openings that can sweep stops before resuming the main direction
• Bearish liquidity on certain timeframes

Clear operational conclusion:

While liquidity continues indicating bearish bias, focus must center solely on short opportunities, accepting that strong pullbacks against the position can occur before the main movement develops.

Elliott Waves, Fibonacci, and the Beginner's Mistake

Common error pattern:

1. Count 1–2–3–4–5 structure
2. Mark the corrective zigzag
3. Fill chart with Fibonacci levels (23.6%, 38.2%, 61.8%)
4. All without checking institutional liquidity

Fundamental problem:

If during the correction liquidity remains bearish, Fibonacci levels lose operational relevance. Price can break through all of them and continue falling, trapping the trader who relies solely on price geometry.

Advantages of Incorporating Liquidity into Analysis

Operational benefits:

• Understand why a strong wave 3 forms, not just "where it might go"
• Avoid premature longs based solely on "magic numbers"
• Improve win ratio and, crucially, avoid large losses against liquidity trend

Crude Oil: Trading Assets with Geopolitical Risk

Sensitivity to Middle East Tensions

Crude oil is especially sensitive to military tensions in the Middle East. Conflict escalation scenarios can easily drive prices toward the $100 per barrel zone.

Operational Challenges

Environmental characteristics:

• Sharp movements driven by news headlines
• Significant gaps between sessions, especially after weekends
• Higher probability of extreme events difficult to manage with traditional stops

Practical Strategy: Point-to-Point Trading

Prudent approach:

1. Seek short setups when the price reaches relevant ceiling zones
2. Reduce position size to compensate for additional volatility
3. Avoid holding positions open over weekends, where gaps can be lethal

Benefits of this approach:

• Protection against explosive moves outside trading hours
• Control over maximum risk per trade
• Capture of significant pullbacks if the conflict resolves and the price rejects the resistance

Risk Management and Professional Psychology

Removing Ego from Trading

Retail trader problem:

• When the idea works: reinforcement of belief in "being right."
• When it doesn't work: frustration and overtrading to "recover."

Alternative professional approach:

• Personal opinion has no relevance to institutional liquidity
• The market doesn't "reward" being right, but managing risk well
• The objective isn't always being correct, but losing little when wrong and maximizing when aligned with liquidity

Designing Coherent Risk Structure

Essential components:

1. Define fixed risk per trade (percentage of total capital)
2. Accept negative days even with good liquidity reading
3. Implement damage reduction tactics in volatile scenarios:
4. • Scaled entries
   • Technical stops at logical zones, not arbitrary
   • Avoid trading during maximum uncertainty if the plan doesn't contemplate it

Result:

Avoid typical novice trader pattern (huge losses, small gains) and build a track record where losses are controlled and winning trades have room to develop.

Operational Conclusions

Methodology Integration

Institutional liquidity, combined with Elliott Waves and strict risk management, provides a clear advantage over most market participants.

Scenarios by Instrument

EURUSD:

• Medium-term bullish context
• Tactical bearish opportunities on small timeframes
• Preparation for longs on pullbacks when liquidity shifts

S&P 500:

• Long-term bullish structure
• Intraday bearish bias while liquidity confirms
• Avoid premature longs based only on Fibonacci levels

Crude Oil:

• Elevated geopolitical risk
• Point-to-point trading with reduced size
• Avoid exposure during weekends

Universal Principles

Three pillars of professional trading:

1. Don't predict, but read liquidity in real-time
2. Don't fall in love with scenarios, but adapt to what the market shows
3. Don't seek perfect trade, but consistent risk management

The difference between consistent results and destroyed accounts lies in how information is interpreted and the plan executed, not in the ability to predict future movements with certainty.