This is a good week to talk about clarity of Elliott wave patterns in forex market charts. For example, take a look at the messy patterns in the euro-dollar exchange rate (EUR/USD) since Monday, April 13 (circled in red):
This choppy, overlapping, uncommitted decline from Monday's peak has been very difficult to trade. Still, even at moments like this, Elliott wave analysis offers you an edge you won't get elsewhere.
Here's what I mean. Yes, this week's action in the EUR/USD has been tough to read -- that's why you see a "?" in the chart above. But what if you "zoom out" and look at the larger picture? You can do that with wave analysis. Above, you see a 75-minute chart; let's now go to a daily one. (Both charts copied from EWI's intensive Currency Specialty Service.)
Suddenly, the picture is not so messy! It's clear that from the December 2008 top, the decline into the February bottom unfolded in five waves. If you know even the basics of Elliott wave analysis, you know that five-wave moves are called impulses, and they always point in the direction of the larger trend. You can also see that the action since the February low has unfolded as a three-wave move: those are always corrections that go against the larger trend.
Now it's getting clearer, isn't it? Don't worry that this week's action may be hard to read: Elliott wave patterns usually clear up sooner than later. And, from the larger picture it's already obvious what bias the EUR/USD currently has.
In fact, if the EUR/USD continues along the path Elliott waves are painting, its next move will likely to be what Elliotticians refer to as "a wonder to behold." That's something no forex trader wants to miss. Get the latest details now in our intensive Currency Specialty Service.