Editor's Note (Nov. 30 12:28 p.m.) | Today served up yet another example of news lagging behind the Elliott wave count. EWI Currency Specialty Service Editor Jim Martens has just posted a video for subscribers which comments on today's forex market action following the central bank's intervention. In his own words, "this might be one of the most important videos I've released". Get instant access to the video and prepare yourself for what's next now >>
Try this. Look back at any day's news and compare it with the forex market action that followed. It's easy to reconcile the two, isn't it? You can almost always find a reason in the news why the markets did what they did.
For example, EUR/USD -- the euro-dollar exchange rate and the world's most-traded forex pair -- fell over 300 pips last week. Well, of course the euro would fall, right? The eurozone debt crisis had gotten so bad that on November 23, even the EU powerhouse Germany had trouble auctioning off its bonds.
Problem is, such explanations only "work" in retrospect. If you asked forex analysts before the German auction what the euro would do next, many would answer: "Let's wait and see how the auction goes."
But you don't have to wait and see; not if you have the right forecasting tools like Elliott wave analysis. Here's a forecast EWI's forex-focused Currency Specialty Service posted for subscribers on November 22, one day prior to the German bond auction:
EURUSD (Intraday)
Posted On: Nov 22 2011 9:00AM ET / Nov 22 2011 2:00PM GMT
Last Price: 1.3498
Both [Elliott wave] counts shown call for new euro lows. Whether it continues lower from here, or after a poke above 1.3615...new lows lie ahead. The corrective nature of the initial recovery from 1.3429 and the lack of a fall to a new low leave the larger downtrend intact.
As you can see, there is not a word here about German bonds. How was our Currency Specialty Service able to make this forecast, then?
Wave analysis doesn't wait for the news. Instead, it tracks Elliott wave patterns in forex charts and lets you watch, in real time, the bullish/bearish shifts in collective psychology of the forex players. Their bias shifts in patterns (Elliott wave analysis knows 13 patterns), so once you establish what part of the pattern you are in, you have a good idea of where the euro (or dollar, or pound, or yen) should go next.