In this analysis, we will look ahead towards 2019 and possible trading setups in the FOREX market based on the Elliott Wave Principle. The analysis will focus on major FOREX pairs and GOLD (XAUUSD) in the medium-long term and medium term.
DOLLAR INDEX
The US Dollar Index (DXY) remains bullish from a long-term perspective. As long as it stays above 93.80, we should see a push towards the 100 level.
The US Dollar put in a low in February 2018 and then made an impulse five advance that ended as wave (a). This was corrected in wave (b) and now we should go further up in wave (c) to complete a three wave correction to the upside. Wave i of (c) looks like a leading diagonal, and as long as we stay above wave (c) low (93.80), we should see a move to the upside.DXY found support at the 50% Fibonacci retracement level and the 200 daily WMA, but we could still see a move lower towards 95.30/20 before this correction is done.
We could be doing an expanding ending diagonal wave c, but it’s only one of several possibilities. An impulsive break above 97.71 will confirm that a low is in place.
Trading strategy DXY
Long at 95.30 or daily close above 97.71
SL: 93.80, or last swing low
TP1: 100
TP2: 102
Euro-US Dollar (EUR/USD)
The EUR/USD dollar moves opposite the DXY, so naturally, I expect it to move lower.
Just like the DXY, we completed a leading diagonal and have been moving sideways ever since the middle of November. Now the 200 daily EMA and 200 daily WMA should act as resistance near 1.15 and 1.16 area.
This sideways movement is not very clear. A top could already be in place. We need to sit on our hands a bit longer until it clears up, but a move towards 1.15/16 should be sold against 1.1815.
Trading strategy EUR/USD
Short at 1.1500, 1.1520, 1.1540 or 1.1575
SL: 1.1815
TP1: 1.08
TP2: 1.05
British Pound US Dollar (GBP/USD)
I expect more downside in this pair. The move has not been as impulsive in character as the EUR/USD, but more downside towards the 1.20 level is very likely.
Wave (A) was a zig-zag that consisted of a leading diagonal and a regular impulse, and wave (B) looks like a double zig-zag that is connected by a triangle.
More downside is expected as it stays below 1.2816.
Trading strategy GBP/USD
Sell rallies between 1.26 and 1.27
SL: 1.2816
TP: 1.2000
US Dollar Japanese Yen (USD/JPY)
The USD/JPY pair has been sideways trading since June 2016. It looks to be within a triangle wave (B), but it’s not very clear right now. Looking at XAU/USD (see analysis below) – that has an inverse relationship with USD/JPY – I expect a move to the upside sooner rather than later.
Eventually, we should complete this sideways move and go up towards 140-150.
Trading strategy USD/JPY
Stand aside for now.
Gold Spot US Dollar (XAU/USD)
XAU/USD has an inverse relationship with USD/JPY, which means that when USD/JPY goes up, the XAU/USD goes down.
XAU/USD has been range trading since the summer of 2016, just like the USD/JPY, and it also looks to be within a triangle.
The triangle is valid as long as it stays below 1379.
Here we see that wave d of the triangle was a flat correction, and wave e appears to be a double zigzag correction. We could see a conclusion between 1295 and 1310.
Here we see that wave c of y looks like an ending diagonal and could go a bit higher.
Trading strategy XAU/USD
Look for signs of a bearish reversal between 1295 and 1310
TraderWgun has over 4 years of experience with Elliott Wave Principle, 6 years trading part-time. Twitter handle @atliveanner
Through time we have developed a very respectable trading strategy which defines Entry, Stop Loss and Take Profit levels with high accuracy and allows you to make position risk free. We are publishing daily and weekly analysis and 5-10 trade alerts per week directly on your mobile device via Private twitter feed and Private Telegram group! NOW! NEW! Enhanced premium membership plans for new members and you have all the best of trading analysis at one place including ElliottWave analysis!
Our service is with you for 4 years! Subscribe now to get more!Â
Sponsored by our recommended brokers LegacyFX. The best CRYPTO broker! Not suitable for US traders.