In this article, we will outline our own Elliott Wave and Fibonacci forecasts on a few major EUR pairs. The goal of the post is to show you how to practice Elliott Wave Principle in any chart by using Fibonacci ratios as a guideline in confirming patterns. Important to note that some of the analysis you will see below may contain a few alternate counts, however, to keep the message clear and the charts tidy, we will present only our Primary forecast together with the invalidation level. Let's roll!
EURJPY Weekly Timeframe Analysis
Rule #1 to chart analysis is: "Understand the macro context of the market and follow the Top-Down approach." That said, we always start analyzing the long-term charts. The weekly timeframe on EURJPY is a classic example of an EW "triple three" corrective pattern which has lasted for over 2 decades and it is probably reaching its completion soon.
According to Elliott Wave Principle: Key to Market Behavior, Prechter and Frost have clearly stated the following:
While a single three is any zigzag or flat, a triangle is an allowable final component of such combinations and in this context is called a "three." A double or triple three, then, is a combination of simpler types of corrections, including the various types of zigzags, flats and triangles. Their occurrence appears to be the flat correction's way of extending sideways action.
If you noticed on the chart above, each sub-wave, except present wave (E), has perfectly adhered to the Elliott wave and Fibonacci relationship by respecting the retracement and extension levels. While it would be ideal to expect wave (E) terminating at the 61.8% fibonacci retracement of wave (C), we must keep an open mind in case price breaks out to the upside and leaves us with a truncated triangle.
How to trade this pattern?
There are 2 ways to approaching the current pattern:
Wait for a break of the 134.00 resistance and then buy the pullback retest by keeping stops at 130.00 or a bit lower and targeting at least the 149.00 resistance or,
Hope for a dip near 122.50 for an ideal completion of wave (E) of red wave Ⓩ and look to position there for a long-term trade.
Where are we wrong with the Elliott Wave labeling? If price doesn't break above the 134.00 resistance and instead crashes below the low of orange wave (C) = 114.60 then the analysis and expectations are wrong and need to be adjusted.
How long can we expect this to play out? Well, if we focus only on the final wave Ⓩ and measure each sub-wave of the triangle, we can expect some major moves in the late summer, early autumn of this year:
Orange wave (A) = 574 days;
Orange wave (B) = 581 days;
Orange wave (C) = 826 days;
Orange wave (D) = 385 days;
Orange wave (E) = 287 days as of March 17th, 2022.
If orange (E) equals 61.8% of orange wave (C) in time then it gives us approximately 510 days, or the last week of October 2022. 50% gives us 428 days which is the first week of August 2022.
EURJPY Daily Timeframe Analysis
In this short-term chart, we see that price went close to the target zone for orange wave (E), however, it found strong bid at the 50% retracement. Any strong advances above the 131.80 in the coming days would make it hard to expect another drop to 122 support area for orange wave (E).
EURUSD Weekly Timeframe Analysis
We believe that the EURUSD pair is currently trading in a triple corrective pattern as well, but not yet suggesting a triangle for its wave Ⓩ, therefore, our primary count remains a simple (A)-(B)-(C) pattern for red wave Ⓩ. If the trendline support keeps holding and price bounces more than 1.1300 resistnace then we can assume a triangle for wave Ⓩ forming, as in the EURJPY case above.
Additionally, price action has been contained inside a downward sloping channel since the start of the correction in 2008 and we have reasons to believe that this pattern will continue for a few more months until wave Ⓩ completes all of its subwaves with an ideal target of 1.0500 or even near parity, 1.000.
EURUSD Daily Timeframe Analysis
How to trade this pattern?
We are playing the bounce in minor wave 4 targeting 1.1200-1.1300 resistance area while keeping the stop loss at the 1.0950. This is a counter-trend short-term trade. Another way to trade this pattern is to wait for minor wave 4 to be confirmed at the upper-bound of the channel then enter a short-trade for the last wave down towards ideal target of 1.0500-1.000.
Where are we wrong with the Elliott Wave labeling?
We will be adjusting this view if EURUSD strongly breaks and closes above the 1.1300 resistance mark. The pattern could morph into another form of correction.
How long can we expect this to play out?
Considering that minor wave 1 took 62 days to complete in a simple zig-zag pattern, if we apply the guideline of Alternation, wave 4 may take a little longer and could provide a more complex pattern, either a double three, triangle or an expanded flat.
EURCHF Weekly Timeframe Analysis
This pair's pattern is also best fit in a triple three zigzag currently bouncing in a wave "b" of (z). The bounce should target at least 50% of wave "a", hence, we are looking for buyers to push in the next 2 weeks towards the 1.0570-1.0700 resistance area. Same trading plan as with the EURUSD pair. The invalidation of this analysis would be if price closes above the 1.0800 before completing wave "c" of (z).
EURCHF 4H Timeframe
Currently reached a 2-months resistance area at 1.0390-1.0405. If this area holds in the next few days, a pullback towards 1.0300 support is to be expected. Once that pullback is finished, after 1-2 weeks, EURCHF could trade higher again to finish purple wave "b" we labelled in the first chart:
EURCAD Weekly Timeframe Analysis
We are also tracking this Primary triple (w)-(x)-(y)-(x)-(z) pattern in EURCAD too which is currently finishing the purple wave "a" with target at 61.8%-76.4% Fibonacci Golden zone. Thereafter, we expect a bounce on a wave "b" before a final breakdown towards the previous low with first target at 1.1930.
EURCAD Daily Timeframe Analysis
How can we trade this pattern? There are a few setups we can play but we prefer a long position once wave "a" is completed around 1.3650 support area. Once we get a confirmation of a bottom, we can position ourselves for a bounce in wave "b" which can take several weeks to complete. Moreover, another trade setup is to short the purple wave "b" once market and price confirms the view.
Where is the invalidation point for this analysis?
We will be wrong, firstly, if price does not hold the 1.3650-1.3630 support for purple wave "a" and instead breaks down further to complete red wave (z) - see Weekly chart of EURCAD. Secondly, we will be wrong if after getting the bounce in purple wave "b", price does not hold the Fibonacci resistance but instead breaks out above the trendline resistance. In this scenario, our triple corrective pattern could get invalidated and adjustements would be needed.
And, that's a wrap! We hope you found value and enjoyed our Elliott Wave and Fibonacci breakdowns :)
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