THE US DOLLAR STRIKES BACК
As correctly predicted, the currency pair EUR/USD reached a bottom at a level of 1.049 in mid-March. The completed sequence of five waves and the extreme bullish sentiment in favor of the US Dollar triggered a reaction to declare the end of the trend. Naturally, all short positions were gradually liquidated with an expectation of a trend reversal.
The forecast proved to be quite accurate. For a period of just six weeks the Euro strengthened despite the "weak fundamentals", "excessively expansionary policy of the ECB" and other similar pieces of worthless media propaganda. Every savvy Elliott Wave analyst knows that bad news are the exact time to buy. Especially when the herd is against you.
The decision to abandon the trade has paid off so far. Currently, the EUR/USD pair trades at a level of 1.12, more than 700 pips higher. The move upwards has been brutal and unexpected by the masses. The readers of the Profit Taker were some of the few who were timely and accurately warned about growing risks in front of the US Dollar bulls.
According to the Elliott Wave principle sharp moves are not a guarantee for a trend reversal. A reversed trend should be expressed through an impulsive move (5 waves) and a correction (3 waves) in the opposite direction. Instead, the move upwards since mid- March seems to follow a 3-3-5 pattern. Such pattern is called a flat correction and does not suggest a change in the overall trend. A completion of the corrective pattern should be expected in the coming days and weeks as indicated at the price chart. The most likely target of the flat correction should be the end of the previous wave 4 (marked as a triangle). Approximately at a level of 1.15, the EUR/USD is expected to resume its downward move towards parity or even slightly below it. Though the anticipated move constitutes the final fifth wave of the trend, excellent profit opportunities still exist. Patient and cautious traders will be rewarded with 15% return on capital in the months ahead.
Source: Profit Taker
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