With such a strong move up, I am presenting an alternate count to the ending diagonal.

I don’t favour one over the other at this point.

I don’t have a handle on the internal wave structure of the apparent ending diagonal. So use caution as this is the last day of the month and just about anything can happen.

The price action on the EUR/USD is continuing to follow the pattern for an ending diagonal. Ideally the last group of wave should themselves be a 5 wave diagonal.

A correction appears due at this juncture.

I’ve been observing the USD/CAD a lot lately. It sure took a dramatic turn back towards its recent lows.

Here is a possible EW count. Note that I always say possible as there are often many counts that fit a wave.

I’ll updte as the pattern plays out.

Well… Indeed there is still an argument for a diagonal pattern.

If not an ending diagonal it could be a B wave triangle. Either way there is good reason to watch for a return to the top of the pattern and to be prepared for a failure at that point.

The Doji candle and it’s position outside of the Bollinger Bands provides fertile grounds for a re-tracement or reversal.

The EUR/USD dropped more than I had expected.

A retracement is due. Let’s see if it is a retracement or a reversal?

The posted chart shows the rejection at the top with a good sized wick on yesterday’s daily candle. The majority of the day saw USD strength.

The most recent 4 hour candle reversed the trend; however it closed with a 50% wick putting the trend in question.

I would expect more donwside at least to start the European session.

Good trading.

Here’s a look at the daily chart on the EUR/USD.

I have drawn out what could be an ending diagonal. I’m not that confident as the pattern is very messy however with the triple rejection at the top I would expect a little more re-tracement downward in the near term. (next day or two).  This would create the correct overall look however the internal wave structure is not typical.

A visit to and then a turn up off the bottom trend-line would bolster this view.

Of course a break to new highs without further pull-back, leaves to the door open to a completely different possibility.

What does support this view is that the target for the top of wave three (which is where the multiple wicks are) is very often quite close to the previous high as it is in this case. That provides the trigger for a wave 4 pull back and then a return to the upside for the final top that typically forms a double top with the old wave 3 high.

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http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2009-07-27.html