I spent a couple of hours looking back to 1985 which was a major Deutschmark crash bottom, around the time that the cold war ended and the 1989 Berlin Wall crashed. Shortly after the DM crashed it started to soar again. The DM then crashed once more ending in 1999-2000 at about the 85 cent price level. From the peak in 2008 the Euro crashed until early 2017. From this ugly bottom the Euro has enjoyed a bullish phase now starting its second year. In 2016 I knew a bullish phase was coming, but hell if I could find a decent wave count that I could publish.
Our present bull market sure looks like a high quality set of impulse waves, which are pointers to a new trend that should keep on compounding. Provided it’s not part of a “C” wave bull market. If the Euro was part of a “C” wave bull market, then this pattern would contain far more diagonal wave structures.
So far there are only a few diagonal wave structures that have developed in their proper locations. The Euro would need to show us 5 waves up in Minor degree, but we’re still working the first 5 waves in Minute degree. Wave 1 in Minor degree could still be a few months away, after which we could see a horrific wave 2 Euro crash. If the Euro crashes, then the US dollar will rally, sending gold into a major correction as well.
We have a November 2017 Euro bottom, ($1.05 US) so if this wave 2 Euro crash is coming then, this is where we should look for major support and a reversal. The Euro should then transform into wave 3 in Minor degree. Once wave 2 in Minor degree has completed then I will look for three sets of 1-2 waves, which would be an extended wave 3. I “always” start off counting, as if wave three is going to extend, but will dump it as soon as they don’t materialize.
From my perspective, Elliott Wave analysis is all about the process of constantly trying to eliminate 4 out of the 5 simple wave patterns we work with. Of course, this is all specific to the degree that we think we are working in. 99.9999% 🙄 of the time we’re not in the degree that we think we’re in.
Even now, the commercials are already net short the Euro with the spread getting wider. The Euro is in the US dollar basket, so all the other currencies that run inverse to the US dollar should also have major reversals. The speculators are betting the exact opposite way, as they are net long by more than a 2:1 ratio. Sooner or later the speculators will get themselves into a “big” bull trap.
This potential wave count is very speculative, but the only way to help confirm it, is by running it. I will still need to tweak this wave count all the time, as I’m sure we will get a few more surprise extensions yet. At about the $1.27- $1.28 price range, we could run into some serious resistance, so we still have some upside room left.
This would also kill my”E” wave decline that I have with the US dollar wave count, so this wave count will be doing double duty. I’m still early on this and I don’t expect it to happen in what’s left of January.