Our short EUR/USD into 1.2600 the figure has begun to get filled as we approach the highly anticipated 2:15 p.m. ET FOMC meeting. The call of “no action” is widely expected, but the accompanying statement will almost definitely put a move into this market. And considering the overall trend of EUR/USD coming into this announcement is down, anything the Fed says even remotely hinting at continued vigilance of inflation will most likely allow EUR/USD to continue on the path of least resistance down.
Here's our preferred wave count from earlier this week. A test of 1.2600 channel resistance puts the 1.2535 lows in our targets, which allows wave 3 (gray) of wave 5 (blue) to unfold pointing to a retest of the heavily bid 1.2480 lows.
A closer look on the 30-minute chart shows a possible corrective wave c equaling corrective wave a (black) at channel resistance 1.2600, as shown above. This successful measured move allows powerful wave 3 down to get underway. And considering the importance of the announcement in just over 2 hours, the 1.2615 stop loss risk we are taking certainly justifies the possible 1.2525 initial reward.
Lastly, this pattern is shaping up as a bearish Gartley from wave 1 down, corrective wave 2 up with symmetrical legs, which points to a strong wave 3 down. I wrote an article for the November issue of Technical Analysis of Stocks and Commodities Magazine with a thorough explanation of the Gartley's tendency to appear early in the Elliott Wave sequence, if you would like further information.
Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.
Disclaimer
The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
