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Originally Posted by Summerset
Monthly:- (See Monthly Chart)
The confirmed break above 3650 as indicated by price break > the Gold fork high median, has negated formation of a double top on the monthly.
Long term, there are now only 2 possibilities:-
1- Wave-1 is the 1st primary bull wave of a Bull market effected by 9/11, and has been dully fully corrected by a zigzag wave-2 to an orthodox 38% of its overall Fib size. The breakout above 1-v indicates that we are now in wave-3 on the monthly, and negates possibility of any complex corrections occurring in wave-2 other than the completed zigzag.
2- If the current undergoing correction falls and closes bellow the Gold fork high median (3720). The analysis in (1) becomes negated, as this would mean that we are still seeing at least an expanded ABC flat in Wave-2, that could still even unfold in a more complex correction.
Primarily, as we take trades only with a momentum proven trend, the Monthly & weekly WSI readings & plots are both showing Eurodollar to have broken out in bullish trend, and therefore we are biased to have broken out in Wave-3 –(possibility-1), and will take long term trading commitments based on this probability.
Projected long term targets for wave -3 calculated from the confirmed Wave-1 Swing are :-
0.618 of wave-1 swing = 1.6770
1.00 of wave-1 swing = 1.8710
Note that as with all wave-1(s), wave-1 on monthly has taken price ideally to a test of the broadening formation, formed on the monthly from Augst 89 à Dec 95.
The current pull back / correction should sustain within the monthly rising wedge, and proceed to break above and support atop levels of the broadening formation > 1.45. Technically, I believe this will proceed as described by virtue of the already broken double top @ 1-v. Having broken the formation, there is no sense in falling back on it except to support on a broken resistance.
We therefore recommend long term to aggressively accumulate 1.3760/1.3720 till 1.3680, for a preliminary advance to 1.46, and further possessing the issue, and holding for mark up until 1.6700.
Keep in mind that as the FED eases on rates, and the ECB raises its anticipated once or twice (25 basis points hikes), interest rate differentials between the Euro & Dollar are bound to reach parity earlier than many speculators anticipate. And the central banks diversifying their reserves in Euros are counting on this premise to dawn on investment & speculative markets and appreciatively mark up their holdings accumulated at 1.32-36 to the dollar.
Its becoming a matter of limited time as the markets begin to discount this as a fact.
Let now evaluate, why the 3760/3720 zones are targeted for accumulation.
Weekly:- (See Weekly Chart)
Wave-1 of anticipated Wave -3 on monthly, breaks up into the confirmed 5 wave counts shown on the weekly. Wave-5 of this wave -1 confirmed on failure at the Elliot channel drawn parallel to the Wave-2 & wave-4 channel line
Typically, we are commencing on a 3 wave correction, pending a 5 wave progression. Because the correction, is going to be as complex as they come. We will not concentrate on the wave form or count, but on its ultimate Fib expansions.
In order to project the ultimate correction's Fibonacci projections, we need to detect & confirm the 1st complete down leg (Wave-A) of the correction, to throw extensions from. We will therefore move to a smaller time frame to break up the weekly candles
Daily:- (See Daily Chart)
Wave-3 is a confirmed extension (1.618 x wave-1), that should be double retraced. Once by current Wave-4 (down), then a tranculated Wave-5 up. And another ABC correction down (the 2nd retracement that will make a double ).
Typically too, wave-4 should retract to top of Wave-1. (3720 zone shown).
Note that Wave-2 was a flat. So we expect the start of Wave-4 to be a simple or double Zigzag first.
To project its bottom we need leg "A" of this zigzag to complete. (lower lows on daily must cease to be made) and leg "B" should commence to a Fib retraction of "A".
Currently this is not the case, as a new low of 4015 was made to day.
Once a low for "A" is established, we will take a fib projection of 1.618 from "A" top to its bottom, and therefore forecast "C" (our long entry zone). Currently with respect to the lows recorded, the 1.618 projection of "A" stands ideally at Wave-1 top (3720). This is yet not confirmed however, until "A" ceases to make lows
Once a low is made for "A" too, we will sell 0.618/0.38 of "A" for 3720 "C" projection
We will also sell the close of the day that closes below the low of the high candle that marks "B"'s top
We will add to our sells on a break of the established "A" bottom.
All to target the 1.618 Fib extension of "A" of course
We will be using the WSI to confirm our short entries, and calling the entries in real time on the thread.
We expect to reverse at 3720, provided the daily WSI confirms, or at a max of 3440 (Long term median on the weekly chart) also on a signal confirmation of the WSI too
In the meanwhile, until a low for "A" is confirmed. Intraday traders can sell the down trend line shown on daily
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MONTHLY:- (See Chart)
We still believe to be in Wave-3 on monthly as outlined under(1) above.
Within the internal structure of this wave (Shown in the monthly chart below), Wave-1 is 1330 pts. Wave-3 has already recorded a magnitude of 1330 pts = Wave-1. The mext target at 1.618 = 2150 pts from Wave-1 top = 1.5125. Initaly, last week we would have prefered to long at 1.618 extension of Wave-1 = 3720/60, and attempted to short a correction to such levels on a weak momentum signal.
WSI Momentum does not warrant this now on the shorter daily & 4hr frames. Further more after last week's action, price has supported on the median of the weekly Fork, on a 3rd test of it.
(See weekly chart).
This support > median, confirms a permenant break of the rising wedge upwards. A test of the monthly .618 (3720), is NO longer forth coming, and relaying on a close monitor of WSI momentum we will stand prepared to reverse & long at this weekly median.
DAILY:- (See Charts)
we have 2 possible counts shown below:-
Daily-i :- Shows the 1st possibility, according to wich, we expect to be currently in a tranculated V.v that should tranculate between 4465-4500.
Our WSI daily momentum chart supports this, & is actually about to forecast a tranculation.
However, I am not biased to see this playout because of the price action that has been unfolding last week. (This is detailed under Daily-ii).
Daily-ii & ii Zoomed. Here, we are in a higher degree 3rd wave (W-III), wich should be equal to previous W-I, or greater than its magnitude by 0.618.
This fact is emphasized by the observations that :-
1-The ii-iv Elliot channel line of past WI, was supported on, effectively terminating WII from making a prolonged bearish ABC correction
2-The iv-A line of the I.iii, & I.v waves, appears now to be breaking upwards, to be supported on. These familiar with Robert Fischer's work & Fib applications, will know that if there was going to be a tranculation here, the iv-A line
should have held as a resistance, for a flat or zigzag to commence down to the ii-iv line at least.
That was initally why we had sold the iv-A line in the 1st place.
Currently Daily & 4hr momentum do not even support failure of the iv-A line.
Accordinly, as of next week, we will stand ready to signal longs to target 4600, & 5100
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