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EUR/USD: How Monday's Drop Fits Into Elliott Wave Pattern
When you look at a forex market using Elliott wave analysis, you have fewer unanswered questions
By Vadim Pokhlebkin
Tue, 31 Jul 2012 16:30:00 ET
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"Euro Advances Most Since February as Officials Promise Support‎" -- "The euro had the biggest weekly gain versus the dollar since February as European Central Bank officials and national leaders pledged..."

That was a headline last Friday, July 27. EUR/USD shot up as high as $1.2386 that day -- but then later the same day, turned around and fell 100 pips. And come Monday (July 30), it fell some more -- as low as $1.2230.
 
What happened? Was the ECB's "pledge" taken away? No. In fact, you'd be hard-pressed to find a "fundamental" reason for the euro's "post-pledge" decline.
 
Elliott wave analysis can give you a clear explanation for the turnaround: On Friday, the 5th wave rally we'd been forecasting came to an end.
 
See for yourself in this intraday forecast our Currency Specialty Service posted around lunchtime on Friday, just as the euro was finishing its rally:
 
EURUSD (Intraday)
Posted On: Jul 27 2012 12:31PM ET / Jul 27 2012 4:31PM GMT
Last Price: 1.2364
 
 
 
[Approaching a…peak] One more new high is sufficient for us to then shift focus to a corrective three wave fall into the 1.2242 neighborhood.
 
Note that downside price target: "$1.2242 neighborhood." Remember where EUR/USD found bottom on Monday? $1.2230.
 
There is not magic here. Elliott wave analysis states that a correction that follows a 5-wave move usually ends in the price territory of the 4th wave of one smaller Elliott wave degree. You can see on the chart that, in this case, the previous wave 4 low was 1.2242.
 
You can put insights like these to work in your forex trading today. Our Currency Specialty Service brings you new forecasts literally 24 hours a day. Details below.

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