On December 21, EURUSD shot up to $1.3200. Forex news headlines were quick to comment: "Euro rises on stronger US, European data."
But after EURUSD hit that high, it promptly reversed and crashed down to the $1.3000 level, where it had been stuck all week.
You may ask: What happened to that "euro-boost" from the "stronger US and European data"?
Good question, and here's the answer: That explanation came after the EURUSD rally, not before. It's easy to fit the news to market action after the fact: Just grab the news story that best "explains" market action. But retrospective explanations don't keep you ahead of the trend. To win in forex, you need forward-looking analysis, before the market moves.
EURUSD (Intraday)
Posted On: Dec 20 2011 10:23AM ET / Dec 20 2011 3:23PM GMT
Last Price: 1.3112
[Nearing a top]
The euro has struggled against a target cluster consisting of where wave (Y) equals wave (W) and the upper channel line. The final leg higher (from 1.3060) is in five waves. The stage is set for a reversal, though the lack of an impulsive decline keeps us from turning bearish.
EURUSD (Intraday)
Posted On: Dec 21 2011 5:49AM ET / Dec 21 2011 10:49AM GMT
Last Price: 1.3151
[Up to a peak]
Prices have reached 1.3199, just below resistance at 1.3210. Five-waves up from 1.2982 are visible, so a setback is due and should it move lower, back through trendline support.
Note that neither of these two forecasts mentioned the news. And for good reason: The December 21 euro-bullish news would have had you buying EURUSD all the way into the top.
Instead of news, we at EWI look at objective Elliott wave chart patterns and work to forecast the markets before they move.
We don't always succeed. But as you can tell from this example, our Currency Specialty Service delivers true forward-looking forecasts. SEE OUR LATEST FOREX FORECASTS NOW >>