Posted on April 24th, 2008 at 8:11 AM

     By breaking the Wave 3 regression trend channels the Euro has begun what looks to be a Wave 4 correction on the Daily Chart.  If this is the time frame that you typically trade this may look like a great chance to short as we can have a retracement down to as much as 1.5043.  However, our Elliott research shows us that selling into a Wave 4 pullback is a high risk move and one that should be avoided as Wave 4 is not one of the more predictable Elliott Waves.  If the daily chart is you only timeframe to trade the smart play is to wait out the retracement and look to go long once Wave 4 is complete, in Advanced GET we look for the Elliott 5/35 Osc to return to zero as a minimum and we are not at that point yet.

     This does not mean that you cannot short the Euro, you just need to find a more suitable chart with a more predictable pattern.  On the 180 minute chart we see that a Wave 5 has completed at a M.O.B. resistance level and we broke the trend line to trigger the short.  If you missed this opportunity you can lower the timeframe even further and look for continuation shorts such as XTL Continuation or False Bar Stochastic Trades like we see on the 15 minute chart.  The key in a market like this is to take the information the Daily is providing (retracement to as low as 1.5043) and find patterns to trade that are predictable and profitable (the shorts on the lower timeframes) while avoiding what is historically not (Wave 4's).

~Ron Wheeler

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