FREE Forex Trading Analysis

Forex Market Insight: EUR/USD Rallies...Why?
Elliott wave patterns suggested a bullish reversal a day before the rally
February 23, 2012

By Elliott Wave International

On February 16, EUR/USD, the euro-dollar exchange rate and the most actively traded forex pair, surged over 170 pips, from below $1.30 to above $1.3150.
The explanations for the strong rally boiled down to "hopes" that the Greek bond-swap deal would be reached.
As we've pointed out before, explanations such as these make sense only in retrospect. They tell you nothing about tomorrow's trend.
On February 15, while EUR/USD was still in the downtrend, Elliott Wave International's forex-focused Currency Specialty Service posted the following intraday forecast:

EURUSD (Intraday)
Posted On: Feb 15 2012 1:28PM ET / Feb 15 2012 6:28PM GMT
Last Price: 1.3068
[Approaching a bottom]
The decline from 1.3322 looks mature, though there is no evidence it is complete. Allow for a dip below 1.3027 (to complete a flat correction) but we're focusing on identifying the upcoming reversal. A rally in five waves at small degree would do the trick.

As expected, EUR/USD indeed dropped below $1.3027 before reversing upward on February 16.
The bullish February 15 forecast was based strictly on the Elliott wave pattern you see in the chart above. The converging trendlines labeled (i)-(ii)-(iii)-(iv)-(v) mark an ending diagonal triangle, which only forms when the trend gets exhausted, and a reversal is near.
This Elliott wave pattern warned one day before the EUR/USD rally began that the collective bias of the forex players about the euro would soon shift from bearish to bullish.
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Applying Fibonacci Retracements to Stock trading

Learn How to Apply Fibonacci Retracements to Your Trading
EWI's new eBook helps you identify trading opportunities
February 8, 2012

By Elliott Wave International

Elliott waves often correct in terms of Fibonacci ratios. The following article, adapted from the eBook How You Can Use Fibonacci to Improve Your Trading, explains what you can expect when a market begins a corrective phase. Learn how you can read the entire 14-page eBook below.

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Retracements -- Corrective Waves

If we look on the left side of this chart, we see a diagram of wave 1 followed by wave 2. It is common for second waves to retrace .618 of wave 1 -- thereby making a deep retracement. We will also be looking for .786. We might often see .5, 50%, but .618 is common. On the right side, fourth waves will commonly retrace a smaller percentage or .382 of wave 3. We might also see something like .236.
Examples
I have put the wave count on this chart of the S&P 500. We have waves 1, 2, 3, 4 and 5. Wave 2 is an expanded flat. Wave 4 is a zigzag. Let's look at the retracements that waves 2 and 4 make.

We see that wave 2 makes a deep retracement. It comes close to .618. Look at this Fibonacci table that I put up; notice that I put .382, .5, .618, and .786. .618 is 1087.75, and the S&P low is 1090.19.

We see that wave 4 makes a shallow retracement of wave 3. It goes just beyond the .382 retracement. .382 is 1169.1, and wave 4 actually bottoms at 1163.75.
In a nutshell, this is what we mean when we say that Elliott waves often correct in terms of Fibonacci ratios.

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the Credit Crisis and the U.S. Dollar

How Does the Value of the U.S. Dollar Fit Into the Big Picture for the Economy?
Robert Prechter discusses his views on the credit crisis and the U.S. dollar
January 31, 2012

By Elliott Wave International

More credit is denominated in U.S. dollars than any other currency. What does this mean for the value of the dollar as the credit crisis continues its strangle-hold on the world economies?
Enjoy this video clip of Bob Prechter from an October interview with The Mind of Money host Douglass Lodmell, in which Bob discusses the debt implosion and the value of the U.S. dollar.
You can watch Prechter's full 45-minute interview here -- no sign up required!

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