On November 16, EUR/USD slipped to $1.3420, a low it's not seen since early October.
"Euro Reaches 5-Week Low on Bets ECB to Buy More European Debt," one headline explained the euro weakness. Strange; shouldn't the European Central Bank's readiness to stop the debt crisis be a euro-bullish factor?
Well, that depends. On a down day, you could certainly say the ECB is "getting desperate," hence the euro weakness. If the euro is up, though, you could just as easily say that the ECB's preparedness is bullish. That's the beauty of "fundamental" analysis: Bullish or bearish, that's almost entirely in the eyes of the beholder.
Problem is, while you know "the reason" why the euro sold off on November 16, you still don't know what it'll do tomorrow.
Your alternative is technical analysis. While it's no crystal ball by any stretch, you actually can use it to make forecasts. For example, here's how EWI's forex-focused Currency Specialty Service is approaching the current juncture in EUR/USD (some Elliott wave labels removed for this article):
As you can see, Currency Specialty Service is counting the move down off the $1.38 high as 5 waves; the term for that is an "impulse." In Elliott wave analysis, after every impulse comes a 3-wave correction in the opposite direction. By our latest wave count, the ongoing upward correction is not finished, so EUR/USD is likely to move higher in the short term.
And you didn't even have to glance at the news to make this forecast.
How much higher is EUR/USD headed, and what happens after? You get instant answers with our Currency Specialty Service now >>
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