Today is a light trading with London and New York off on their merry way. On light trading days, only the hard-core traders are out there looking for trading ideas. Since trading is intensive and draining, on days with lighter volume it pays to observe and analyze potential trading set-ups for the rest of the week.
We present to you a 4 hour chart of the EUR/USD and an elliottwave analysis that spots specific price levels to be alert to. What we first did was find a time frame where there is a clear pattern to base expectations on. In a trend channel, the Euro sold off in five waves and has rallied back in three which implies a further move down to 1.2780 and below.
But when to sell with low risk? A move below Friday’s low would signal that there is selling demand and, though, a rally can occur the seller’s have the chance to rule the day. Another possible area for a potential selloff is price rejection at 1.2960.
Of course, as we speak, the Euro is not going down without a fight and is slightly strong, but do we buy immediately? No. With elliottwave, we try to find a price level that would signal buying demand and a further price rise to an additional price target. For our analysis, which we illustrate below, a move over 1.2980 should lead to 1.3020 and potentially 1.3040.
We will be updating Elliottwave counts and as you observe what we write, it should be clear as to how to do this yourself.
If you have any questions, please contact me at eric (at) caesartrade.com