EURUSD: Top Down In-Depth Analysis - Bull BAT and CRAB Pattern

28 de jun. de 2015

Spent several hours analyzing this pair for what's happening both short and long term. IMO, my analysis reveals that prices are heading towards a strong support zone area around 1.11000-1.10000 with a confluence of factors lining up around that support zone. Before I go into detail about those factors, let's take a look at what's happening overall from a top down perspective to get a clear picture.

From a weekly viewpoint, we are currently in a bear flag consolidation wave after a long impulse wave down. Not concerned much with the proper Elliott wave count as much as just that the previous wave down was truly an impulse wave. That much is clear.


Zooming in on this corrective wave, my analysis shows that it is unfolding in a complex double zig-zag ABC-X-ABC wave pattern. Currently, we are in the B wave of the 2nd ABC zig-zag with prices heading towards the bottom trend line of the bear flag. Examining further this corrective wave structure reveals a possible harmonic fib relationship between the first ABC zig-zag and the 2nd ABC zig-zag, If/when prices complete the C leg of the 2nd ABC zig-zag, it will end at/near the top of the bear flag channel and at a harmonic 1.618 extension of both ABC zig-zags within the corrective bear flag structure. Further analysis also suggests a AB=CD pattern developing pointing towards the top of the bear flag. There is also a DEEP CRAB pattern within this bear flag that could develop should prices follow through with the AB=CD pattern completion. The deep crab would also complete at the top channel of the bear flag. Also, the top of the bear flag is at the .382 retracement of the previous impulse wave down.


After analyzing what's going on from a big picture point of view, let's zoom in and see what is happening now and where the opportunity is to jump in to this market and make some pips. Currently, prices are very near completion of a BAT pattern missing the .886 BAT termination D point at 1.11230 by a few pips last week. I expect that this BAT will complete. BUT I will not suggest to play this BAT pattern as there is also a CRAB pattern that is pending completion that I feel has more significance. Watch price action closely this week (could be as soon as today) and If prices head down strongly towards the 1.10600-1.10590 area to complete the CRAB, then it's a good indication this CRAB is very significant. CRAB patterns tend to complete with a strong move. A confluence of factors lie in wait down where the CRAB completes which support a move back up as per my long-term analysis as outlined above. They are:

1. the CRAB ends within a historically strong support/resistance zone from 1.11000 - 1.10000
2. Of course, this zone is flanked by the two significant round numbers
3. the PRZ of the CRAB pattern is supported by the 1.618 termination D point (1.10590), the 2.618 AB extension (1.10595) and the 3.14 BC projection (1.10383)
4. And of course, if you look left, this PRZ falls right near a previous support structure
5. it also terminates right near the bottom trend line of the bear flag channel (see DAILY chart above)

CONCLUSION: Prices will extend down past the BAT pattern (thereby invalidating it) and into the PRZ of the CRAB pattern and possibly even extend a little further past it reaching the bottom trend line of the bear flag before bouncing up and starting the C leg of the current 2nd ABC zig-zag of this corrective wave we are currently in. Longer term, the C leg completion will reach the top of the bear flag channel, completing the larger bearish DEEP CRAB pattern, reaching the .382 retracement of the previous impulse wave before commencing another strong impulse wave down to new lows.

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