Analyzing Forex With Elliott Wave

While Online Stock Trading Guide is primarily stock trading site, analyzing Forex with Elliott Wave expands upon the possibilities available using Elliott Wave analysis.

Many of you know that I have provided information on using Elliott Wave analysis since this site began back in 2008. This is because I have always found something useful when studying this form of technical analysis and in particular, with the products and services provided by Elliott Wave International.


I am also a believer in the importance of thinking for ourselves, being able to admit being wrong and using stop losses to protect our hard earned money. With that said, any ideas or techniques we decide to put to use should be applied to fit into each of our own trading strategies.

If you've ever used or thought about using Elliott Wave analysis for stock trading, the following article on analyzing Forex with Elliott Wave shows how cross-market adaptable it really is.

How Analyzing Forex with Elliott Wave Can Help You Catch Both Rallies and Declines
FreeWeek of Elliott Wave International's Currency Specialty Service is here thru Nov. 18
November 12, 2010

By Elliott Wave International

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): 

Analyzing Forex with Eliott Wave

[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: 

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

This article was syndicated by Elliott Wave International and was originally published under the headline How Analyzing Forex with Elliott Wave Can Help You Catch Both Rallies and Declines. 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.

Return From "Analyzing Forex with Elliott Wave" To "Elliott Wave"

Elliott Wave Videos

Learn to trade in the direction of the forecasted trend with this free video course. Click here to start watching: Free Elliott Wave Video Lessons

Free Newsletter Updates

Trading Resources

Stock Trading Software
Stock Trading Software
Stock Trend AnalysisStock Trend Analysis