Sentiment Shifts Back Towards Bears Providing a Bullish Signal

FX:EURUSD   欧元/美元
2345 9
Tomorrow morning, the US Non-Farm Payroll report will be released which could create some volatility for the USDollar . Today's post is meant to provide a frame work of levels to monitor so when the news is released, we can follow our own plan rather than getting emotionally driven by the market.

After careful study of the price action since early December, there are 2 elliott wave counts we are following. We are favoring the bullish count as the sub-waves match up cleaner. This implies a medium term bullish outlook in that a red circle wave iii higher started from yesterday or will do so over the coming days. Breaking above the purple trend channel and moving above 1.0950 is key to increasing the odds we are in red circle wave iii higher. See the pre-NFP post we made from early December for the longer term wave labels.

Yes, that bullish count would imply a break above 1.1090 which we've highlighted as a critical level for bears and would suggest a retest of 1.17. Perhaps the wave count is providing us an early warning signal of the move.

The alternate count is a bearish count and is noted in orange. The sub-waves don't line up as well, but it is still being considered.

Sentiment is tracking nicely for the long count. We were a little concerned on January 5 that sentiment was providing a mild bearish signal. However, it has now flipped to providing a mild bullish signal since the current reading is -1.27.

Through the NFP release tomorrow, watch the real time sentiment reading to provide clues about the near term direction. If the reading grows more negative, look for prices to move higher. If the reading moves more positive, look for prices to fall. Watch sentiment in real time HERE.

Happy Trading!
评论: NFP is hitting the wires in 10 minutes...be mindful of increased volatility. Watch the SSI in real time...I'm looking for a move below -1.6 to hint at a break above 1.1000
评论: With the EURUSD near the top of the NFP range, looks like another test of the 1.0925-1.10 congestion is coming.

评论: EURUSD is still in the congestion zone. A lot of emotion with stocks plunging and oil selling off. EURAUD plumbed the 1.5950 which suggests more strength coming. EURUSD sentiment is dropping and now at -1.5. Keep an eye on 1.1000 - a break there may be an early warning signal of a 1.1085 break.
Hi. I happened to come independently to the same conclusion. Glad to see similar bullish opinion, especially the 3rd wave projection. My conservative set point goal was 1.15 . Your retest point of 1.17 sounds even better. I've got into the position almost at the bottom of 2nd wave yesterday when I saw some thrust movements at smaller time frames, with risk/reward 3% . Thanks for your good and more complete (than mine) analysis. Regards and good trades.
Yes...so the Aug 24 high becomes the target on the preferred wave count if 1.1090 breaks. This is because wave C of the larger A-B-C flat higher likely retests the 'A' wave high.

(Note the red A-B-C labels on this longer term count.)
Congrats ! your chart is selected as chart of day by me. This is also best way to read the market in case if you dont know lol :P #justkidding
+1 回复
Wow FxSaint - those are some of the kindest words I've heard from a trader! Thank you for warming my day.

Back to business. Now that price is on top of the purple resistance line...we're in a zone where price may struggle for further gains. If prices fall hard from here, that could mean this up move might be another (x) wave leading to a (z) lower.

Above the (x) wave high near 1.1000 will negate the (z) wave interpretation. Above 1.1000, we likely break 1.1090 which means a potential retest of 1.1700 over time. Not guaranteed, but as mentioned in the original comments, this could be an early warning signal for a bull run. Sentiment continues to run more negative...now down to -1.56 which helps the bullish case.
+1 回复
PaQu JWagnerFXTrader
Speaking about sentiment. We had similar situation recently (before Christmas) the sentiments was around -1,6 (60% of shorts), but price wasn't able to break above 1,10 and there was drop till 1,07. That time sentiment indicator failed
Yes, nothing is fail proof. Taking sentiment in conjunction with other types of technical analysis helps filter the signal from the noise. In early December, we were anticipating a pull back towards 1.0750 as a higher probability move.

There are 2 main ways I look at it:

1) Raw figure in extreme territory -> +/-2 is when it starts to get extreme
2) Shift in sentiment -> something going from +1.1 to -1.5 (like what we've seen in EUR/USD lately) is an example of shifting sentiment.

Back in Dec, the most extreme it got was around -1.8. There was strong resistance at 1.1090 and it just couldn't break.

Thank you for the comment PaQu.

PaQu JWagnerFXTrader
Thanks for clarification. Good luck.
Thanks for clearing up the picture! I belive that (w)-(x)-(y) might as well be an a-b-c.
Your welcome Csys. The analysis was carefully studied because it was not a clean picture at all. The reason I went with w-x-y is because all 'c' waves (except in triangles) need to subdivide as a 5 wave diagonal or impulse. You'll notice at the beginning of (y) I have a note that is looks more like a zig zag than an impulse. As a result, I moved the labels to w-x-y (flat-zigzag-flat). w-x-y and a-b-c do imply a similar outcome which we mustn't lose sight of.

There are several possibilities at this point, a break of support or resistance levels will help clean up the counts. Cheers!
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