Sunday, 25 August 2013

EUR/USD steep decline directly ahead?

The EUR/USD hourly chart looks to be setting up for a steep decline directly ahead, so long as last week's high is not beaten. The impulsive 5 wave move lower from last week's high defines the trend as down under the Elliott Wave model, and from there we've seen a 3 wave upwards correction that looks complete. If the upwards corrections is indeed complete, then big wave 3 down has begun and should be a steep decline.

Zooming out to the daily chart supports the view that the EUR/USD could have made a significant peak last week. Whether or not you agree with the somewhat lopsided Head and Shoulders top labeling, only Blind Freddie or a pure Funnymentalist could deny that the illustrated trend channel has merit.

Zooming out further to the weekly chart also supports the view that last week's high is key, as it could have been the high point of a false break through trend line resistance.