It looks like both currency pair diagonals are not actually in play and that tops may be in place.

We are at important pivot points, especially on the GBP/USD.

Here’s a potential count.

As in many technical disciplines it is necessary to consider more than one possibility and then choose the scenario that you believe is the best fit.

The result may often be wrong however this does allow the trader to pick a threshold on where he/she believes they are wrong and allows for an exit point to reduce the loss in the case of an incorrect assessment. Learning to accept where you are wrong is one of the most important skills to learn as a trader.

As a fellow trader friend of mine once said; I would rather not be in a trade, then stuck in a bad one.

With both the EUR/USD and GBP/USD at important levels vis-a-vis the potential Elliott Wave Counts, I am presenting alternate possibilities in the even of breakouts.

Cheers

The EUR/USD is now hovering around a crucial pivot point if the diagonal theory is to hold.

A break much above 1.42 without a substantial pull back towards the lower trend-line negates the pattern

Whereas a good pull back to about the 1.40 area and a reversal back up towards the high reinforces the pattern.

Cheers

I’m posting another possible count as after reviewing the previous one it simply appears that wave 3 would be coming in far too short of the top.

So here is an alternate…

Cheers

Here’s one potential count on the EUR/USD.

As always this is just one potential count and may/will need adjusting.

Cheers

Here’s a count on the GBP/USD.

As you can see, the beginning of the structure fits the pattern very well. However the second wave is very choppy; which even though is not a true 3 wave affair, it fits within the rule exceptions of being a corrective wave pattern.

Moving forward it looks like wave 3 may be complete and we are now waiting for a resolution of wave 4.

BARE IN MIND, the count may need revising after the next series of price moves.

Please see the previous blog entry for introduction to the Ending Diagonal.

The internal structure of an ED (ending diagonal) will have 5 movements of 3 waves.

As an exception to the standard Elliott Wave Rules, each wave overlaps the other.

Each 3 wave affair is an ABC. Normally C waves are the longest but in ED’s many times the C waves are themselves short 5 wave ED’s.

The final wave may or may not exceed the entire pattern, however exceeding the pattern and then a sudden and violent reversal is most common.

There are many more rules and guidelines however this forms the basis for the study. Next blog entry will look at one of the pairs to see if we can spot one developing.

Cheers

As many of you who visit my blog; you know I love Elliott wave Theory. One of my favourite aspects of the theory is the Ending Diagonal. In other technical disciplines it is known as the ‘Wedge’, ‘Triple Top/Bottom’ and ‘Diagonal Triangle’.

The USD pairs may be developing Ending  Diagonal at this time so I will focus on this aspect of technical analysis over the coming days.

Diagonals form because of the push and pull of the Bears and Bulls fighting it out at critical turning points. These waves form a pictorial view of the battle between these colliding forces. So when the diagonal plays out, marginal new highs and lows are rejected suddenly and with great volume.

Here is a classic Elliott Wave Ending Diagonal formation that happened on the EUR/USD last year. Remember that all patterns are fractal and can form at any degree on any time frame. They are simply easier to see on longer time periods.

Firstly; Diagonals can also be “Leading Diagonals”, so be careful not to mistake them as they will break to the opposite direction that you are expecting.

Ending Diagonals form at the end of long strong moves. Typically at the end of wave 3’s and C’s. AND also at the end of wave 5’s to form a very long term reversal.

Note: This Diagonal ended a wave three, reversed to the technical target of where it started and then was followed by a wave 4 that gave way to a “Terminal wave 5 (which was also a diagonal, just not as pretty). The result was a very tradable opportunity for a sell position on this pair.

I will follow up with potential formations on the current USD Pairs in the coming blog entries over the next few hours and days.

Here is this week’s view on the Daily charts.

Cheers

http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2009-06-29.html

When things are volitile like this on a Friday, I step back and look at the big picture.

The USD Index is at a tipping point. If it crosses the Rubicon here, then a new low in the USD (high in EURO and GBP) is very possible.

The trend line has been rejected, but so far, not in a very convincing manner. Let’s see what next week brings.