In the past two weeks, here on elliottwave.com you may have read a few Free Updates that talked about a telling Elliott wave pattern that has been forming in the euro-dollar charts.
That pattern is called a "triangle." The editor of our Currency Specialty Service, Jim Martens, has been tracking it daily in the charts of the euro-dollar exchange rate, EURUSD. This is one of Jim's charts that we re-published in the November 19 Free Update:
If you've been following the EURUSD, you know that since last week, it has rallied strongly – about 600 pips, so far – pushing the exchange rate back up to $1.30 and robbing the buck of its latest gains.
Despite the rally, the "triangle" interpretation of the current picture in the EURUSD still stands. Jim Martens gives his Currency Specialty Service subscribers detailed analysis of the situation every evening; here is the zoomed-in chart of the potential triangle from last night:
There are two things to keep in mind here. One, that triangles are corrective Elliott wave patterns (the other kind is "impulsive.") And two, corrections can be very long, protracted and frustrating affairs. During corrections, patience should be your main strength. Jim reminded his Currency Specialty Service subscribers of that recently in a Market Insight comment:
11/11/2008 – Timing is everything. That's an old (and often repeated) saying, and it's so true. Many market participants want to be in the "action" all the time. I, on the other hand, have always favored shunning market risk, stepping up only when the opportunity is clearly in our favor, and the risk is pre-defined.
Waiting is always difficult. But if you watch the gambling shows on the tube, you'll see that even the professionals pick their spots. In Blackjack (or "21"), the professionals wait until the deck is stacked in their favor, either betting small while getting a favorable "count," or having others watch for them and then signaling them to lay down a big bet – at just the right time.
I believe the best approach to the markets mirrors this strategy. Timing, timing, timing. ...JJM...
And – patience, patience, patience. If Jim's analysis is right, when this triangle finally resolves, we should see a lot of volatility in the market. Plus, it's almost December – the time of holidays, when markets get thin, which further contributes to volatility.
It's a time for caution. Caution means knowing exactly where your risk is – and few methods show you that as precisely as Elliott wave analysis. Give it a shot – you can have our latest forex forecasts on your screen in seconds. Here is how.