EURUSD To Test Lower Levels Still

• Euro To Test Lower Levels
• Japanese Yen Could Be In Larger Correction
• British Pound Consolidating Before Testing Channel Support
• Swiss Franc Objective Near 1.1600
• Canadian Dollar Spinning Top on Daily
• Australian Dollar Tests Support
• New Zealand Dollar Preferably Comes Lower In Wave C


Commentary: We maintain that wave 4 within the 5 wave bull cycle from 1.3261 is underway now. Wave 2 (of the same degree) took 4 weeks to play out and this week is week 3 for wave 4. Therefore, we expect a significant bottom to form next week. We wrote yesterday that “it is possible that wave B of 4 is complete at 1.4770 and that wave C is underway towards 1.4500.” As it turns out, wave B was in place and the EURUSD is on its way towards where C would equal A at 1.4423. The 38.2% of larger 3 is at 1.4353. We expect at least a drop to 1.4423 by next week and possibly 1.4353. Near term resistance to add to the short trade is at 1.4620.

Strategy: Bearish, move risk to 1.4770 (from 1.4908), target 1 at 1.4430


Commentary: The correction that we have expected could be complete at 109.66. The other scenario is that a larger correction is underway and that the ‘real’ next leg up in the USDJPY will not occur until a test of 109.21 (50% of 107.20-111.22). That scenario is outlined here.

Strategy: Flat (for now)


Commentary: Stepping back and focusing on the daily channel has served us well this last week. We wrote a few days ago that the GBPUSD has dropped below the midpoint of the long term channel and that price is likely to test channel support. The pair has plummeted and a small period of consolidaton is in order before we get a test of the mentioned channel support (probably next week) closer to 2.0100. A measured objective is at 2.0024 (100% extension of 2.1160-2.0353/2.0831).
Strategy: Bearish target hit at 2.0200


Commentary: We wrote yesterday that “a short term bullish bias is warranted against 1.1153 since the decline from the top is in 3 waves. A larger correction could test the 61.8% of 1.0886-1.1327 at 1.1054.” The larger correction did not play out and the USDCHF is in the next leg up (that could test 1.1594). A small setback offers an opportunity to get bullish against 1.1153. Look for long opportunities at 1.1265 and 1.1230.
Strategy: Get bullish near 1.1230/1.1265, against 1.1153, target 1.1594


Commentary: The USDCAD is putting the trendline / Fibonacci combination that we have mentioned the last week to test. We wrote yesterday that “a daily close above the trendline gives scope to the next level of potential resistance at the 78.6% level (1.0479).” What we saw yesterday was a spinning top that gives scope to a reversal towards weakness in the USDCAD. The short term pattern shows a small 5 wave decline with the current rally as a corrective bounce. A bearish bias is warranted against 1.0216.
Strategy: Bearish against 1.0216, target TBD


Commentary: “The decline from .9399 could be just an a-b-c decline. This is suggestive of a resumption of the uptrend and eventual rally through .9399. The other count is bearish and suggests that an a-b-c flat correction is unfolding from .8753. In either case, price is expected to exceed .9068.” We have maintained a short term bullish stance against .8653 and price has held above there (barely). Needless to say, confidence in the bull at this point is low.
Strategy: Bullish, against .8653, target TBD


Commentary: We would still like to see a larger corrective setback in the Kiwi before committing ot he bull side. “The large 5 wave advance from .6639-.7891 indicates that the larger trend is up but a larger correction is expected before a resumption of the uptrend. The decline from .7891 has yet to even reach the 38.2% level of the previous rally. As such, the decline from .7891-.7435 is most likely just wave A in a larger A-B-C decline. Wave B may have ended at .7760 and wave C is underway now. Under this count, price is expected to come under .7435 and likely test the 50% of .6639-.7891 at .7265 before the next leg up begins. The NZDUSD count is more clear than the AUDUSD count. The bearish Kiwi count calls into question our short term bullish stance regarding the AUDUSD.”

Strategy: Flat