Elliott Wave Analysis of EUR/USD 11 May 2010

“Lending more money to already over-borrowed governments does not solve their problems” says Mr Carl Weinberg. The FX markets seem to agree, as the Euro is rapidly giving up a lot of the gains it made yesterday. Are we going to 1.1700 directly?  Let us start by acknowledging that just about anything could happen. A technical specialist sitting in Kuwait is not going to make any difference to the outcome. Neither can any of the politicians or economists. The markets are driven by fear and greed. But this is exactly what Elliott Wave analysis seeks to deal with. Let us try again. I present you with two scenarios. (Remember that wave counting is always a work-in-progress, and no one can state with 100% certainty which is the right label until after the move is over. Yet, when we approach the markets in a consistent way, there are rewards to be had). The first scenario suggests that we are in the 5th wave and if the 5th wave of the 5th equals the 1st wave of the 5th, then we will bottom out close to the previous low. The second scenario suggests that we have already posted the end of the 5th wave and so what we are seeing now is just a deep correction of the first wave of a new uptrend. Both scenarios would imply that in the coming weeks the Euro will trade significantly higher, towards 1.35 levels. Now, I could be completely wrong this time. I have been wrong before. However, I do seek to be consistent about what I say until proved wrong. For finance managers who wish to hedge their exposures to Euro, this dip is ‘manna’  from the heaven. If you had attempted a trade yesterday by picking a bottom, that would have lost you some money. A trader has to always protect his capital by  using sensible stops. The benefit of technical analysis comes from providing you with low-risk trading ideas, not ‘risk-free’ trades. Good luck today and beyond.


P.S. Thomson Reuters are sponsoring a Trading Room Chat via their messenger service for MENA region tomorrow. Yours truly will be conducting the event. Will try to publish the charts in this blog afterwards.


  • L1ctin

    Nice count, similar move happened in 2008 sell off. i have 2 questions…beeing new to ellot wave what educational resources should i look for/what do you recommend? 2. i have an euro/usd chart with wave counts i made, how can i share it with you so i can have a feedback from you. If i may.

    Thank you,

    • Hello Lucian,
      There are many good books out there in the market and ample free resources on the web too. It will help you to read a good book and also go through the various real life examples in this blog. Good luck! Ramki

  • Patt

    Thanks Ramki.

    The price came along with your chart.

    I just found this website few days ago. I used to study elliott waves and left it and now I started to learn it again because I see it’s pretty accurate and it has proven for a long time.

    Will keep coming back here. Good work.

  • ahmad

    I’ve just started trading forex and have been looking at a lot of wave counts provided by the forex trading platform’s in house technical analyst.

    Do you think I should follow their wave counts as most of them seeems to be of the oppossite from most wave counts provided by unrelated individuals (to the forex platform companies).

    Maybe u should take a look at wave counts provided by xyz(name withheld).com?

    • Hello Ahmad,
      Thank you for your comment. In my opinion it is dangerous to look at more than one or two people for guidance. The nature of Elliott Wave analysis is it is subject to many different interpretations. One will never know which count is correct until after the move is over. By looking at several commentators, you will not only get confused, worse, you will not know when to stop your losing position. Besides, there are many people out there who are actively updating blogs/websites/selling services without really understanding all aspects of wave analysis. Hence, you should be careful. Good luck!

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