The dollar index might have ended the wave 4 correction which means that we will see a test of 100 with EURUSD going to parity. In my previous posts I explained why the structure was corrective and what to look for. So far everything lines up, however this doesn't mean that the dollar index can't take out the low at 92. This does however mean that IF the dollar index moves lower again it should do that in 3 waves from the current levels. So even if it moves lower we can wait, adjust and trade a high probability sell. (wave 4 will change into a W-X-Y-X-Z structure in blue) For now I focus on the 4 hour time frame where a correction might be starting soon. I determined for different reasons the 98 and 98.5 zone as high probability reversal zones (short term). We have FOMC on Wednesday so I will update up to that event because it seems that structure is setting up a trade for FOMC. For intra day trading I consider the arrows on the 4 hr time frame as the high probability trades.
The move lower we saw from 97.50 was corrective. So now the question is was this only a wave A and will we see a wave C lower next as shown by means of the bearish arrow? If we see that happening we can have some fun trading FOMC. With what is going on in Europe with all the uncertainty the FED might come up with some excuses not to do much in the near term. However even if the FED disappoints nothing changes in Europe. We also know that the rate hike was foolish from the beginning and FED is looking for excuses to break their promises regarding that rate hike ever since. This all resulted in major consolidations for Dollar Index and EURUSD. I don't see this end soon so be prepared to trade the range for a little longer (range on daily time frame so still very interesting). Nevertheless I'm not projecting what makes sense because if the market made sense we had not as much volatility as we see every single day. So forget that and only keep it in mind when looking for levels to trade from and context why we might see spikes without follow ups. (some call it stop grabbers I call it opportunity) Structure tells us what's next in the best possible way. If we see a third leg lower I will prepare for a buy, FOMC or not. I showed major levels if price moves higher and these levels will be important when trading FOMC. I'll update but not share trade idea's. When I trade news events I make a very specific trade plan and adjust very fast when needed and the lag in posting might hurt others. However I will update tomorrow and explain what I'm looking for. If the market does what I want I will get triggered during the volatility, if not I'm not in the trade and let it all settle before entering this instrument again.
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I would like to see this sell opportunity before FOMC to happen (3rd leg lower), in that case I will be looking for a buy later on (probably during the event). However IF price extends higher up to FOMC I will be looking for a sell (ideally our of that zone I showed in the previous chart). If I don't see any of these two scenario's unfold the way I like it, I let it go because it can also turn into a non-event or an unclear structure up to NF. I'll will update later on today.
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Daily shows 3 waves at the moment and if we don't see a new high this means that we have to focus on the bearish scenario I described in the original post (W-X-Y-X-Z).
However the 1 hour time frame makes me believe we are dealing with an ABC correction.
So the plan is simple as always, IF we see a consolidation after the bearish impulse of today, prepare to sell (which will result in another bearish break and likely a new low, below 91.90). If we see on the other hand a reversal, wait for the consolidation and prepare to buy to target a break above 97.50.
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TimStuyts
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There is no more room to update my analyses so I will create a new post tomorrow. However look at the structure that seems to repeat itself (green boxes) and even if we make a new high on lower time frames for what I count to be wave X. I simply don't like the structure to call it an impulse (maybe an impulse for a wave C but not for an 12345 structure) Therefore keep an eye on the 1 hour time frame for clues because as long as there is no confirmation pretty much combination is possible since the dollar index is in no-mans land at the moment. So my projection is what I see based on experience but I will also focus on 1 hour time frame because experience only matters if you use it in your advantage which means keep an open mind at all time! I will emphasize that I do not disagree with any technical view that follows the rules for structure but I can't agree neither until I see more price action. In terms of trading opportunities I will also use the 1 hour time frame as explained in the original post.
Victor.Y.F
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Thank you for your sharing! We now have a 3 if BOJ can't push it to 5 waves tomorrow then we will see a complex wave 4 or a zigzag target below 91.919. Let's see next down leg is a 5 or a 3. If next down leg is a 3 then it's a complex wave 4 triangle. If it's a 5 then new low.
TimStuyts
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I don't agree with your rational to be honest but that's okay, let's focus on the structure here. Zigzag is invalidated by the way, we either see a 'Flat' correction on the higher time frames as shown in the chart for wave 4 or a W-X-Y-X-Z. (Or do you mean a zigzag lower for wave Z) Don't be to fast with drawing conclusions in terms of 3 of 5 waves lower and what to expect next. a wave Z for example can be a Flat, Zigzag or triangle structure or even a combination of those. So let's not get lost in names here because we might be facing a very complex corrective combination, key is the set-up is clear both ways I think (1 hr chart) and I will update when things start to move again (because a chart tells more than a 1000 words I guess, at least when I'm explaining). Thanks for your input and good trading to you.
Victor.Y.F
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Thank you! Yes, I mean a zigzag lower but we could see a push higher at first by BOJ today. I'll post my chart. Good trading to you too.
TimStuyts
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Let's not get lost in all possibilities. There is no clue whatsoever yet and all corrective possibilities are still on the table IF we see a wave Z at all.
arif_awan
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TimStuyts
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Good call in terms of determining resistance, hope you were able to place stop loss above previous high so you had a risk/reward of 1/5 or even higher when trading FOMC. I only use S/R to trade out in combination with structure otherwise we know that structure is based on passed results and doesn't provide any statistical data in terms of success-ratio and risk/reward, where structure explains future moves and provide statistical data regarding success-ratio and risk/reward. Would you next time please also provide context in terms of stop loss (invalidation) and target so we can add value to the analysis and help others by discussing set-ups? Thank for sharing and good trading to you.
DanV
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Hi Thanks for sharing your analysis.
Just wondering if your wave (II) has retraced more than 100%, ie it is below the low of wave 2. Unless you ignore the wicks of the candles. I have not checked this but it looks like some other counts are at play.
What do you think?
TimStuyts
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A wave 2 can never break below the origin of a wave 1, wicks or not. I see my green wave 1 shifted to the left. I'll adjust that but it won't change the highest probability wave count as shown in the chart. Key is to determine whether wave 4 is in place. And short term we most likely see a bullish acceleration or a reversal out of the zones I mentioned.
There is no more room to update my analyses so I will create a new post tomorrow. However look at the structure that seems to repeat itself (green boxes) and even if we make a new high on lower time frames for what I count to be wave X. I simply don't like the structure to call it an impulse (maybe an impulse for a wave C but not for an 12345 structure) Therefore keep an eye on the 1 hour time frame for clues because as long as there is no confirmation pretty much combination is possible since the dollar index is in no-mans land at the moment. So my projection is what I see based on experience but I will also focus on 1 hour time frame because experience only matters if you use it in your advantage which means keep an open mind at all time! I will emphasize that I do not disagree with any technical view that follows the rules for structure but I can't agree neither until I see more price action. In terms of trading opportunities I will also use the 1 hour time frame as explained in the original post.