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EURUSD: Draghi Speaks, Euro Rises?
This Elliott wave pattern saw the rally coming before Mr. Draghi ever spoke

By Vadim Pokhlebkin
Thu, 07 Mar 2013 21:45:00 ET
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On Thursday (Mar. 7), the European Central Bank president, Mario Draghi, made headlines with an optimistic statement that, "Later in 2013 economic activity should gradually recover..." 

The euro gained and pushed EURUSD, the euro-dollar exchange rate, as high as 1.3117. But as it's often the case, the rally was "in the waves" before the news.
The day before, on March 6, our forex-focused Currency Specialty Service posted this chart (some labels not shown):
EURUSD (Intraday)
Posted On: Mar 6 2013 7:53PM ET / Mar 7 2013 12:53AM GMT
Last Price: 1.2977
The Elliott wave pattern you see between the converging blue trendlines is called an ending diagonal. It only appears in 5th waves -- i.e., at the end of the move. Once a diagonal ends, prices always reverse sharply.
You see that on March 6, the forecast laid out an idealized path for EURUSD: first a bounce, then a slight new low. We got the bounce, but EURUSD was so oversold that it never stopped and just kept climbing:
Here was the case where the market "refused" to print every last idealized Elliott wave wiggle on the chart.  

And yet, recognizing the price pattern -- and its implications -- still prepared Elliott wave forex traders for the sharp reversal long before Mr. Draghi ever spoke.

Get the latest EURUSD analysis, Elliott wave-labeled charts and price targets inside Currency Specialty Service now.



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