Elliott Wave EUR/USD

I found some forex charts at the Saint Louis Federal Reserve that go back to 1971. I was very excited to get these because this gives a very long look at the markets and where they are heading. I am working on labeling these with Elliott Wave counts and will be posting them up. The first one I am putting up is the USD_JPY. It has taken almost thirteen years for the ending diagonal pattern it completed last week to finish. The Japanese Government actually ended it early by intervening, but it was almost over anyway.

Here is the NZD chart from 1971 to present. My analysis of this pair is that the 4th wave was an expanded flat and wave 5 is underway. Wave 4 cannot intrude on wave 1 territory so this makes a good case that wave 4 is over.

Here is one more possibility for the NZD. It could make a regular flat before going down to new lows.

Here is a look at the August 24th Euro daily chart and The September 17th daily Euro chart. The current retracement was a little deeper than I originally drew out on my chart, but I won't change my forecast unless it goes past the previous high.

What can Elliott Wave do to improve your trading? Despite popular belief, Elliott Wave is not a trading methodology and does not give entry and exit signals. I thought it could do that when I first started studying it, but I learned otherwise. What it is very good at, is letting you know when a market cycle is nearing an end. If you know what an impulse wave looks like and can chart that, then you know some type of correction is coming up next. Once you are proficient at using EW analysis then you will know when a correction is coming to an end and can start looking for good entry points for the upcoming impulse wave.

I will state this again for anyone that does not already know this...........THERE IS NO HOLY GRAIL OF TRADING.........There are lots of good trading methods and you must use one or a combination of several to build your own trading system. Personally I use Elliott Wave as a guide to know the markets general direction, and I use Fibonacci levels and candlestick patterns to look for entry and exit levels.

Also there is no substitute for learning how to trade yourself unless you give your money to a managed fund. Please don't waste your money on these systems that claim to make you 1000% per month. If those people could make that kind of return they would not be selling their system for any price, much less several hundred or thousand dollars. Spend your money on books and study them diligently. Once you have acquired the knowledge and experience to be successful then that belongs to you and no-one can ever take that away. I personally spend more time studying and learning than I do trading because I have only been trading about three years. I am writing these things down as a humble friend to anyone that wants to be a successful trader. I wish you all great success in life as well as trading.

Dave

Back to work now on the Aussie.

I am going to go into a little more detail about where I went wrong on my recent analysis of this pair. The slanted red channel I drew on the chart was where I thought this pair was headed. Why not because it reached a very substantial fibo retracement of 76.4% and then started down. Also I had a valid wave count that showed the move could be over. Also after the turn at 9200 there were some nice bearish engulfing candles that showed strong downward momentum. All of these thing added up to extremely high odds that a reversal was on. I was happy and making lots of money. I actually took some really nice profit on this trade but alas, I gave it all back later because I did not think I was wrong.........LOL....... This pair went up and I shorted it. It actually went my way again for about 50 pips and I did not move my stop to break even or better because I was sure I was right. It went against me and I doubled up because I was sure I was still right. finally after it passed about 9275 then I had to admit to myself that I was wrong and take a large loss. This is a lesson in how not to trade. I rarely do reckless things like this anymore but I did it this time. The interesting part about this trade is that I could still been out with a profit or break even when I was up 50 pips, plus kept my previous big profit. That is how I almost always trade, but not this time, and it cost me. Just remember that discipline is key. It doesn't matter how good your trading system is.......If you don't have the discipline to follow it then it is worthless to you.

Now let me just comment on what I think is happening to this pair currently. I think it is making a regular flat now. If you notice the green B wave is above the start of the A wave. In a regular flat the B wave is anywhere between 100% and 138% the size of the A wave. I have concluded that in mainstream chart pattern terminology a B wave in a flat would be termed a bull trap or a bear trap depending on which way the market was moving.

Now look at the second chart with the straight red channel.
I just sold this pair and if I am wrong then I will gladly take a 50 pip stop and try another short later. If this is regular flat then it is going down to the 8050 area. I want to be on that train but I don't want to go broke trying to get on it.


Good Trading Everyone,
Dave

It certainly appears that the USD_JPY is in a shallow wave 2. I have placed a buy order at 86.02 with a stop at 85.70 because this pair could drop some more before it goes up again.

I canceled my 86.00 order and just bought at 85.07 with a stop at 84.70