Color Daily EURUSD Forex Chart Shows Lengthy Divergences

Nov 1, 2009: 4:42 PM CST

Instead of looking at the Euro Index, let’s take a look at the Euro – US Dollar FOREX Pair – EURUSD – and see the current ‘color chart’ along with two sets of momentum divergences and an Elliott Wave count.  Sound complex?  Let’s look at it step by step.


(Click for full-size image)

We see a daily graph of the EURUSD starting with mid-2008 so we can see the lengthy positive momentum divergence through early 2009 that preceded the rally phase that has taken us to the current levels of 1.5000.

Since then, a lengthy negative momentum divergence has formed, which serves as a non-confirmation of the angular price rise off the early 2009 lows.

The oscillator is a color version of the 3/10 Oscillator I use (information via the link).

The oscillator formed a momentum peak in December 2008, but to compare price to the oscillator, we’ll use the March 2009 peak so we can follow along with the divergence which also corresponds with the stock market rise off the March 2009 lows.

In addition, I’m showing a possible 5-wave fractal Elliott Wave count, in which the final fractal 5th wave itself is subdivided into a 5-wave progression that has reached its peak at one of the lowest positive readings in the momentum oscillator.

Though it’s difficult to see, the 50 day EMA rests at 1.04656, a level to watch for support… or an acceleration of price to the downside if this level fails to hold here.

What remains is a battle between the “simple” form of technical analysis – trend continuation which is bullish – vs the more ‘advanced’ concepts of Elliott Wave and lengthy negative momentum divergences (bearish).

For those who don’t trade or monitor FOREX, you can watch the Euro Index under symbol $XEU in StockCharts.com or most other charting platforms.

For more analysis on the US Dollar Index and broader Cross-Markets, consider subscribing to our Weekly Intermarket Technical Analysis service.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

9 Comments

9 Responses to “Color Daily EURUSD Forex Chart Shows Lengthy Divergences”

  1. fufufnik Says:

    Corey, Am I correct in believing that the paintbars you are using are from LBR?
    If so, could you tell me how I could download these paintbars?
    Thanks a bunch,
    -todd

  2. iMeMyAction » Blog Archive » IvyBot #1 Forex Trading Robot, Largest Aff Payout On Cb! Says:

    […] Color Daily EURUSD Forex Chart Shows Lengthy Divergences | Afraid … […]

  3. Name Says:

    The waves you label as 1, 2, 3 are better labeled as an A,B,C. because A=C.
    A triangle links the correctional ABC to a 5 wave impulse. The US dollar trails the long term bond market by months and has matched the bond decline pattern perfectly. The bond decline was an ABC followed by a triangle and 5 waves. We should see months of an ABCDE upward consolidation in the US dollar from here on. It's going to be a bumpy ride down for assets. C and E is going to be the worst.
    Or so I think…
    Thanks Corey for sharing. Your blog is on my must-visit every day list.

    Marc

  4. Corey Rosenbloom, CMT Says:

    Hey Fufufnik,

    Absolutely, though I've modified the file slightly to show the yellow color instead of just the red and green.

    You can download the TradeStation file from Linda's LBR Group FAQ page:

    http://www.lbrgroup.com/index.asp?page=FAQ

  5. Corey Rosenbloom, CMT Says:

    Thanks Marc!

    That's what gets me about this count – which is similar (though inverse) in the Dollar Index itself (and Euro index).

    The 1 and 3 form an “AB = CD” relationship (measured move) roughly, and they tend towards symmetry… but the 5 is just … all over the place in seeming strangeness.

    For Elliott Wave counts, I tend to simplify them so as to get the main idea, eschewing a purist count and trying to see the larger picture (for example, negative divergences).

    Thanks for sharing your insights! Much appreciated.

  6. moneycometh Says:

    Both, your example of the 3/10 oscillator and the Elliott's are two great tools I've looked into. I'm in the process of printing out your oscillator example. I'm doing the same with the Elliott's wave principal.

  7. moneycometh Says:

    Both, your example of the 3/10 oscillator and the Elliott's are two great tools I've looked into. I'm in the process of printing out your oscillator example. I'm doing the same with the Elliott's wave principal.

  8. A Quick Look at the Daily Euro Chart Feb 17 | Afraid to Trade.com Blog Says:

    […] November 1: “Color Daily EURUSD Shows Lengthy Divergence (with Elliott Count)” […]

  9. forexhug Says:

    eurusd always down position this time i move usdjpy tradings