17 January EURUSD Elliott wave analysis: ending diagonal?


As the markets generally await big events this week, we look at how traders can use the expected volatility. Based on 17 January EURUSD Elliott wave analysis, an ending diagonal is about to complete. Will EURUSD fall again soon?

17 January, AtoZForex - Price histories of financial instruments exist in patterns which are in simple ratios to one another. These patterns are formed on the smallest time frames which are the building blocks of the same patterns on the larger time frames. One of the most efficient methodologies used to spot these patterns is the ELLIOTT WAVE THEORY. An Ending diagonal was forecast yesterday as part of a larger zigzag correction. The chart below was used in the analysis. This article will recommend the trade parameters to use for this setup based on our 17 January EURUSD Elliott wave analysis.

16 January EURUSD & GBPUSD Elliott wave analysis Hourly EURUSD Elliott wave analysis chart (click to zoom)

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The following quote followed the article.

This correction, earlier speculated to have ended with an impulse wave, may now complete with an ending diagonal. With this extension, price may rally to 1.075 before the expected bearish trend resumes. This is just a probability, price can move in many other ways, but this is of high likelihood.

We spot this pattern because its the most likely we can think of to complete this structure. With two legs to go and bound below 1.075, we could have a good reason to short EURUSD soon. The chart below is the present price action.

17 January EURUSD Elliott wave analysis: what next?

Hourly EURUSD Elliott wave analysis (click to zoom)

The chart above shows that price is in the last leg of the diagonal pattern. Ending diagonal patterns are terminating patterns. They appear at the end of a motive wave ( 5-wave) or a corrective wave ( a-b-c correction). We expect upward movement to be contained below 1.0735  for this diagonal pattern to be valid. Any bridge above 1.0735 will cause this pattern, and by extension this analysis, to be invalid.

Trade Idea: Sell EURUSD at 1.0578 with stop loss at 1.0735 (invalidity price) targets at 1.037 and 1.025.

Note: This idea/analysis will be invalid if price rallies above 1.0735.

Do you have other views in contrast to the ones listed or you want to compliment them further? let’s know by your comment below.

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