Commentary: We wrote yesterday that “the decline from .8947 may be in 5 waves and if that is the case, then there is a bearish opportunity. The rally from .8807 could very well be unfolding in 3 waves as either larger wave B or 2. Look for a short term bearish entry near .8894/.8917 (61.8%-78.6% of .8947-.8807).”
Risk is low but bears should be careful. Upon further review of the charts, the rally from .8051 is unfolding as an impulse. Impulses are always in 5 waves or derivations thereof (such as 9, 13, 17, etc.). A rally to a new high (even if just a slight new high) above .8947 would satisfy minimum expectations and then lead to a reversal. We see this scenario is more probable given the bullish structure in Cable and Yen (pro-carry near term).
Strategy: Move to flat (from very short term bearish)