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EUR/USD: Why Did the "Spain Bailout" Rally Fizzle Out?
How Elliott wave patterns warned you not to buy into the Spain bailout over the weekend
By Vadim Pokhlebkin
Mon, 11 Jun 2012 18:45:00 ET
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You've seen us show many examples of how Elliott wave patterns in market charts LEAD the news, not FOLLOW it. Here's a fresh one.

Over the weekend, the news came that the European Union authorities granted Spain the bailout funds to save its banks. On its heels, EUR/USD, the most widely traded forex pair, rose from near $1.25 on Saturday (June 9) to $1.2670 on Sunday (June 10). That was a rare "weekend" move (forex markets are technically closed on weekends). The mood going into Monday was very optimistic:
 
FOREX-Euro jumps above $1.26 on Spain bank relief‎ (Reuters)
 
But after hitting that high of $1.2670, on Monday morning EUR/USD reversed and fell more than 200 pips, to $1.2447 -- below the starting point of the weekend rally. Were there any warning signs? If you were using Elliott wave analysis -- yes.
 
As early as Saturday (June 9), our forex-focused Currency Specialty Service analyzed EUR/USD Elliott wave chart patterns and made this forecast:
 
Update For: Monday, June 11
Posted On: Sat, 09 Jun 2012 00:53:57 GMT
EURUSD
Last Price: 1.2517
 
Rolling over after [finishing the upward] correction.
 
 
Then early on Monday morning our Currency Specialty Service night shift team took over and posted this intraday update:
 
EURUSD (Intraday)
Posted On: Jun 11 2012 3:20AM ET / Jun 11 2012 7:20AM GMT
Last Price: 1.2626
 
Still higher to complete [the upward] correction. 
 
 
"Correction" was the word used in both of these Currency Specialty Service updates. Why was that important? Because in Elliott wave analysis a correction is just a pause within a larger trend. A correction always gets more than 100% retraced -- which explains the 200-pip decline on Monday. 

Where does that leave EUR/USD now? Find out via our latest forex intraday updates -- look below for details.


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Tags: Elliott wave, Elliott Wave trading, eu, euro, euro/USD exchange rate, European debt crisis, forex, forex trading, technical analysis, technical indicators, U.S. dollar
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