I can count out the 4th-wave low ending somewhere between 116.80-50. So far, I count an a-b-c-x-a-b with just ‘c’ left to go. Now, in traditional Elliott Wave analysis, a wave 4 will often terminate somewhere near the area of the previous wave 4 of one smaller degree. Compared to the purple labels, one smaller degree is the black roman numerals. So, we are projecting the purple wave 4 to terminate somewhere around 114.35. 114.35 was reaction low from last Friday's Non-Farm Payroll. If you recall, this is where we built our long positions on Friday. Then, if 114.35 holds, all that's left is a tidy move up to 118.00 in wave 5 to complete the 5-wave sequence.

I plan to get aggressive down into this zone and work my average a bit by breaking up my entries. I plan to be long on the way down at an average of 116.50. Below 116.25 and I have no more interest being long, so stops will be in the vicinity of 116.20. My orders are out to buy between 116.65 and 35 every 10 points down.



Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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