{"id":103152,"date":"2017-03-09T23:32:46","date_gmt":"2017-03-10T04:32:46","guid":{"rendered":"http:\/\/countingpips.com\/?p=103152"},"modified":"2017-03-09T18:33:53","modified_gmt":"2017-03-09T23:33:53","slug":"eurusd-when-price-pattern-trumps-other-reasons","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/03\/eurusd-when-price-pattern-trumps-other-reasons\/","title":{"rendered":"EURUSD: When Price Pattern Trumps Other “Reasons”"},"content":{"rendered":"
March 9, 2017<\/div>
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Waves of market psychology often warn of trend changes before the news — see how <\/span><\/h3>\n

By Elliott Wave International<\/span><\/h3>\n

This was an eventful week in politics, monetary policy and the markets — and to many observers, the three seemed to be linked.<\/p>\n

On Wednesday (March 1), the U.S. dollar did something it hadn’t done in almost two months: It got stronger. Two reasons were behind the move, said analysts: The Fed’s imminent rate hike, and, President Trump’s widely-covered address to Congress:<\/p>\n

“The dollar hit a seven-week high on Wednesday after hawkish comments from two Federal Reserve<\/strong> officials late on Tuesday increased expectations that the U.S. central bank is closer to raising interest rates.” (CNBC, March 1)<\/p>\n

“U.S. Treasury yields rose along with the U.S. dollar…as investors…gave a sigh of relief after President Donald Trump’s<\/strong> speech to Congress.” (Reuters, March 1)<\/p>\n

It’s easy to attribute the dollar’s sudden strength to those two stories, yet this adds up to a classic case of what we call post-market action rationalization. Yes, these are logical and satisfying explanations, but here is a litmus test for both: Next time the Fed makes a hawkish comment or the President speaks, what will the dollar do then<\/em>?<\/p>\n

There is no way to answer this using conventional market-forecasting tools, other than to say: Let’s wait and see how the market reacts. But there is a better way.<\/p>

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As early as Monday (February 27), Elliott wave patterns in EURUSD, the euro-dollar exchange rate, already warned that the rally in the euro\/weakness in the dollar was getting long in the tooth.<\/p>\n

Said our forex-focused Currency Pro Service<\/em>:<\/p>\n

EURUSD<\/strong>
\n[Posted On:]<\/strong> February 27, 2017 03:47 PM<\/span><\/p>\n

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[Looking lower against 1.0679] <\/strong>(Last Price 1.0588):\u00a0We are looking for a wave ‘(ii)’\u00a0double zigzag correction\u00a0top to form… And with an impulsive looking pullback occurring from 1.0630, a correction top may have been set already at that 1.0630 high point.<\/p>\n

“Double zigzag” is Elliott wave speak for a complex correction. Even if you’re not familiar with the method, the word “correction” tells you everything you need to know: It’s a countertrend move that will likely be more than fully retraced once the trend resumes.<\/p>\n

Which it did — EURUSD fell, as expected. This March 3 Currency Pro Service<\/em> chart shows you the extent of the euro decline\/U.S. dollar rally (partial Elliott wave labels shown):<\/p>\n

EURUSD<\/strong>
\n[Posted On:]<\/strong> March 03, 2017 03:14 PM<\/span><\/p>\n

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Now, it’s hard not to notice that since that decline, EURUSD has rebounded. But again, the move is most likely part of (you guessed it) a correction.<\/p>\n

So, no matter what you read in the news regarding the reasons for this latest euro rally, know that when the euro\/dollar trend changes again, so will the mainstream’s “reasons.”<\/p>\n

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This article was syndicated by Elliott Wave International and was originally published under the headline EURUSD: When Price Pattern Trumps Other “Reasons”<\/strong><\/a>. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.<\/em><\/p>\n

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Waves of market psychology often warn of trend changes before the news — see how By Elliott Wave International This was an eventful week in politics, monetary policy and the markets — and to many observers, the three seemed to be linked. On Wednesday (March 1), the U.S. dollar did something it hadn’t done in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-103152","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/103152","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=103152"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/103152\/revisions"}],"predecessor-version":[{"id":103153,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/103152\/revisions\/103153"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=103152"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=103152"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=103152"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}