Using Elliott Wave Analysis for Forex

Analyzing Forex with Elliott Wave Can Help You Catch Rallies and Declines

Free Week of Elliott Wave International’s Currency Specialty Service is here until Nov. 18, 2010

On November 1, the EUR/USD — the euro-dollar exchange rate and the most actively-traded forex pair — was trading the $1.38 range, near the level it is today.

But if you look at what the EUR/USD did between November 1 and 9, you’ll see a huge 400-point (or pip, in forex lingo) rally into the November 4 top — and an equally huge decline back to the levels we see today.

That’s an 800-pip “round trip” in just six trading days — a huge move which obviously caught a lot of the U.S. dollar bears and bulls by surprise. Could you have seen it coming?

If you know how to analyze currencies with Elliott wave, the answer is probably “yes.” Wave analysis helps you identify patterns in market charts and tells you how those patterns — ideally — should develop. In other words, Elliott allows you to narrow down multiple possibilities to a handful of probabilities.

A probability is never a certainty. But it’s better than a shot in the dark, as this example demonstrates.

On November 1, Elliott Wave International’s Currency Specialty Service posted the following end-of-day forecast. (Some Elliott wave labels removed for this article):

Elliott Waves Euro/USD
  • [Higher, into a top] The euro is poised to thrust above 1.4160. The question is if the thrust takes place before the FOMC announcement and ends afterward, or starts in response to the announcement. Before or after, the euro should hit new highs.

What gave Currency Specialty Service the confidence to make that forecast? It was the “contracting triangle” pattern you see in the chart above. They often appear in 4th waves, right before the market’s final push in wave 5. The EUR fulfilled the forecast with a 400-pip rally into the November 4 top. The following day, our Currency Specialty Service wrote:

  • The euro is reversing course after a thrust from a triangle. The decline from 1.4283 might not be in five waves, but it has the characteristics of an impulsive wave. A correction of the rally from August should reach the 1.3636-1.3700 area, the 38.2% retracement of the advance…

…which brings us to the price levels where we find the EUR/USD today. And if you’re curious to know what Currency Specialty Service has to say now, you have a great opportunity:

Free Week is live through noon EST on Thursday, November 18! You can access all the intraday, daily, weekly and monthly forecasts from EWI’sCurrency Specialty Service right now through noon Eastern time Thursday, Nov. 18. This service is valued at $494/month, but you can get it free! Access Currency Specialty Service Free Week.

Euro’s Twists and Turns: What’s Next for the Currency?

(Note: This video was recorded on November 5, 2010)
Since the November 4 high, the euro has declined sharply against the U.S. dollar. Does this mean that it’s time for a trend change in the dollar? Watch the free video below to get Elliott Wave International’s Senior Currency Strategist Jim Martens’ take on what he thinks is coming next.

EWI’s Forex FreeWeek is happening now! For an entire week you get free access to EWI’s intensive Currency Specialty Service. Hurry! Forex FreeWeek ends Thursday, Nov. 18.


Free Video Lesson

Watch Jim Martens, Senior Currency Strategist at Elliott Wave International, the world’s largest market forecasting firm, give tips on how to trade forex with Elliott wave analysis – free.

  • The U.S. dollar is the current center of the global financial community’s attention, and it will likely stay in the spotlight for a while. That could be good for the forex market – and you, a forex trader.
  • Already the largest and most liquid market on the planet – with the daily volume ten times larger than the combined daily turnover on all of the world’s stock exchanges – recent focus on the dollar is likely to attract even more currency speculators. And that means even more volume and liquidity – a nimble trader’s paradise.
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What’s the U.S. Dollar’s Next Move?
Elliott Waves Provide An Answer

This example video features Elliott Wave International Senior Currency Analyst, Jim Martens, using Elliott wave analysis to forecast the U.S. dollar’s near-term moves.

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Forex Trading using Elliott Wave Theory