Eur/Usd : Downtrend still alive

In my last post about eur/usd i was looking for a top, unfortunately this didn't happen, price rallied higher. The important thing is that i still count this rally as corrective with a good chance of being finished. This makes me take a look at the longterm count. Let me first present you with a chart posted on this blog may 10th 2011. Here you can see i was looking for a downtrend to begin. A lot of people had another view due to price breaking the trendline. But price declined and wave Y started.















The question now becomes how to count the waves inside this wave Y. I see 2 possibilities as shown on the chart below. It's all about where wave (W) of Y finished. In the first scenario, circled in red, wave (W) of Y finished at 1.2623 and wave (X) of Y is a bit small, but this doesn't make the count impossible, no rules are broken. A nice fibonacci target zone comes around 1.1716 - 1.1773. In the second scenario, circled in green, wave (X) of Y is sharp and is the biggest rally since the 1.50 top. Also price broke a pretty strong trendline and just like when price was around 1.50 a lot of people are bullish now. The difference here is that this time around, price is still in a big downtrend, instead of at the end of an uptrend, making this top a counterrally top. A nice fibonacci target zone for the second scenario is at 1.0795 - 1.0957.















Let me finish by saying that there are a lot of valid signals for a bottom, but the previous low at 1.1875 ( wave W low ) will act like a magnet to attract price. Another thing i'd like to mention is that there are different possibilities to count eur/usd, my alternative count has price in wave E of an expanded triangle. But before i look at this alternative count, price needs to break the cycle of lower lows and lower highs, with the latest lower high at 1.3485.