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The editor of our Currency Pro Service, Jim Martens, wrote in a Thursday morning intraday update:
"Good morning. EURUSD plunged after ECB President Drahgi announced it would review and reconsider its policy in March, and that there are 'no limits' to how far the ECB will deploy its tools. That's code for additional QE.
"The problem with blaming euro weakness on his comments is that the decline started earlier, much earlier. The most recent recovery high (1.0984) was established almost a week ago (Jan. 15).
"The decline this morning represents a continuation of the decline that was already underway."
In other words, market psychology, reflected in Elliott wave patterns, had turned bearish well before the ECB statement -- and warned you of the coming selloff.
Forex traders used Mr. Draghi comment as an "excuse" to sell the euro, but the selloff was due regardless of what he had said -- or if he had said nothing at all.
Just another example of how Elliott wave analysis helps you "peek around the corner."
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