People rely on EWI to trade in the currency markets. Included here are two examples of how Elliott Wave is used.
First a video from July 13, 2007, Jim Marten (Elliott Wave International’s Chief Currency Strategist) explains how the Elliott Wave (R.N. Elliott) is used in Forex forecasting…
After the video is an article by Vadim Pokhlebkin explaining how “the news” impacts the currency markets via the traders.
|
Here is a recent article from EWI on the currency markets…
EUR/USD: What Moves You?
By Vadim Pokhlebkin
(Vadim Pokhlebkin joined Robert Prechter’s Elliott Wave International in 1998.)
What moves currency markets? “The news” is how most forex traders would undoubtedly answer. Economic, political, you name it — events around the world are almost universally believed to shape trends in currencies.
A January 14 news story, for example, was high up on the roster of events that supposedly have a major impact on the euro-dollar exchange rate. That morning, the European Central Bank announced it was leaving the “interest rate unchanged at the record low of 1% for an eighth successive month.” (FT.com)
The euro fell against the U.S. dollar after the news. But could it have rallied instead? You bet. In fact, traditional forex analysis says it should have. Here’s why.
Analysts always say that the higher a country’s interest rates, the more attractive its assets are to foreign investors — and, in turn, the stronger its currency. Well, U.S. interest rates are now at 0-.25% and in Europe, at 1%, they are 3 to 4 times higher. Isn’t that wildly bullish for the EUR? Apparently not, and wait till you hear why — because in today’s announcement ECB president Jean-Claude Trichet warned that European recovery would be “bumpy.” Ha!
By no means is this the first time a supposedly bullish event failed to lift the market. On June 6, 2007, for example, the ECB raised interest rates. Bullish, right? But the euro didn’t gain that day, either — the U.S. dollar did.
Watch forex markets with these “inconsistencies” in mind and you’ll see them often. In time you realize that it’s not news that creates market trends — it’s how traders interpret the news. That’s a subtle — but hugely important — distinction.
So the real question becomes: What determines how traders interpret the news? The Elliott Wave Principle answers that question head-on: social mood — i.e., how they collectively feel. Currency traders in a bullish mood disregard bad news and buy, leaving it to analysts to “explain” why. Bearishly-biased traders find “reasons” to sell even after the rosiest of economic reports.
If you know traders’ bias, you know the trend. How do you know? Watch Elliott wave patterns in forex charts – it’s reflected in there, on all time frames.
Access EWI’s intraday and end-of-day Forex forecasts now through next Wednesday, February 10. Learn more about EWIs FreeWeek here.
Related posts:
Elliott Wave – Google News
Pingback: Can Prechter's EWI Show Which Way Forex Markets Will Go?- Forex4Trader