analysis eurusd 080909

EURUSD Analysis

Currency Pair : EUR/USD August 9, 2009

1-hour

Comment:
Elliott Wave:	The 4h chart is not as clear as the weekly or the hourly chart. Price was unable to penetrate the 61.8% resistance @1.46 and stalled at 1.4445 where a double top was formed. I am now waiting for confirmation in form of a 5 wave decline and 3 wave up. But the fact that in wave 5, the territory of wave 1 was violated, gives me confidence that we are dealing with a reversal. One caveat, the latest top at 1.4445 was in 3 waves, so an expanded flat could be occuring here.
Indicators (RSI & MACD):	MACD and RSI showing divergence and trend reversal on all timescales except yet the weekly where now the MACD is flattening and showing a sign of crossing over.
Fundaments/News:	Fundamental news is a mess right now. Better than expected job data supposedly caused the dollar to strengthen, but more significant is that oil dropped. Also the SP500 still made gains and correlation between eurusd and eurjpy is now not gone. For the time being.
Reference Charts:
Oil			SP500			EURJPY
Comment:
Oil broke down while SP500 made more gains. SP500 is at a critical level in this bear market rally and I think it will turn within th enext couple weeks for another bear run. Note how eurjpy is following the SP500 and eurusd is following oil.
Elliott Wave Pattern Alternates:
4 hour
The 4006 level interferred with wave I of 5 of this latest move up. The 4445 top can be counted in 3 waves, which gives us an expanded flat and thus a wave C that is currently in progress, instead of the reversal depicted above. Wave C in an expanded flat or irregulat top can retrace to the origin of wave B. It can run past it and there is really no good guideline to determine its length. But the important thing is that in this case a new top can be formed by another impuls up. That is why trading this pair short comes with significant risk and that will affect the stops.
Trading:
Ideal Elliott Wave Pattern:		Ideal Trading Plan: Idealy we wait for wave a or 1 to complete. Remember we are speculating on a reversal and wave a would then be labelled as wave 1. Then we wait for the retrace and the entry would be at the 61.8% retrace which is possibly around 1.43. stop would be at 4445. I am not going to trade a reversal as upward from 4445 is a fibonacci cluster and there is no real target to trade to. An alternate stop could be 4343, more risk but better R/R. R/R: Risk is 145 pips. Targets for this trade: 3 lots targets 1.41, 1.40, 1.39. Total pips: 900 R/R= 435:900 = 1:2
		Money Management: 3 lots combined should not add up to more than 3 % of your balance taken the stoploss into account, total pips at risk is 435.
Traders Wisdom of the Day:
The market is the market, it is not there to get you. It gives you the opportunity to jump in at any time to make a profit. It doesn’t care if you are right or wrong. Take ownership of your trades and don’t blame the market for losses.
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