Below are three intraday updates that Elliott Wave International's Currency Specialty Service editor, Jim Martens, posted on April 30, the day when the U.S. Federal Reserve Bank cut interest rates by a quarter point.
You see these intraday updates in the order of their appearance. First one was posted at 12:49 Eastern (New York) time; third one – at 14:12 ET, three minutes before the Fed announced its decision.
12:49 ET/16:49 GMT
[EURUSD] Last Price: 1.5571
[Bottoming, higher] I received an email asking about the short-term picture in EUR$. Here was my response. 1) A flat [correction] could be unfolding from 1.5578 with a dip below 1.5546 in wave C to complete the pattern. The rally resumes from there. 2) A triangle is unfolding from 1.5578 and that means a thrust higher in a C wave starting from above 1.5546. 3) Wave three [rally] of the diagonal is underway from 1.5558. Once the diagonal is complete, the entire rally would end and EUR$ would fall to a new low. Multiple wave counts don't allow for high probability, although all of them are bullish for a short time.
14:04 ET/18:04 GMT
[Market Insight] The Fed decision on rates is due at quarter past the hour; in about 15 minutes. Note that the [Dollar] Index has not crossed over any significant upside level. I'm staying bearish the dollar here.
14:12 ET/18:12 GMT
[Market Insight] After advancing in five waves, EUR$ has been consolidating. That suggests EUR$ will move higher on the news (dollar weakness).
When the Fed's news came out at 2:15 Eastern, the euro-dollar first dropped to about $1.5540 – in line with the "flat correction" forecast in the first intraday update above – and then reversed and shot up over 100 pips.
Now, contrast these short, decisive, precise forecasts with what you and other currency traders probably read in the news Wednesday. For example, Bloomberg.com reported on the morning of April 30 that some forex analysts were of the opinion that, "Dollar Heads for Monthly Gain Against Euro on View Fed to Pause":
"The dollar is headed for its first monthly advance against the euro this year on speculation a cut in interest rates by the Federal Reserve today will be followed by comments signaling policy makers are about done with easing."
Of course, after the EURUSD went the opposite way, it became clear that what the "fundamentals" were suggesting was nothing but speculation – i.e., rumors and hunches.
Elliott wave-based forecasts will not always be correct. But there is one thing you can expect from them most of the time: objectivity. Elliotticians don't just speculate about the trend – they forecast it. Right or wrong is another matter, but the word "speculation" is simply not part of the proper Elliott wave lexicon.
Find out now where the U.S. dollar is likely headed next – subscribe to EWI's Currency Specialty Service and get immediate access to 24-hour forecasts of the major currency markets.
(Editor's note: Your Currency Specialty Service subscription also gets you instant access to a free 49-minute webinar on how to apply Elliott wave forecasts in your forex trading. The webinar, recorded live on March 25 by EWI's Senior Currency Strategist Jim Martens, covers topics such as:
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How do I identify trade set-ups?
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How do I set protective stops using Elliott to help me manage risk?
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How do I set price targets using Elliott?
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How do I identify a wave pattern in real time forex trading on my screen?
To watch this free 49-minute webinar now, subscribe to EWI's Currency Specialty Service and click on the "Video/Education" tab once you have logged in.)