Australian Dollar and Kiwi Approaching Bullish Extremes - Expect New Highs

  • Euro Bullish Above 1.3400
  • Japanese Yen Triangle - Look for Terminal Thrust
  • British Pound Small 3rd Wave Higher
  • Swiss Franc Channel Is Key
  • Canadian Dollar Hovering at 1.0700
  • Australian Dollar 5th Wave Objective Above .8390
  • New Zealand Dollar 5th Wave Objective Above .7491


Commentary: The EURUSD has gone nowhere since 5 pm (NY) yesterday, trading between 1.3423 and 1.3446. This is usually the type of price action we see prior to the release of the employmwent situation. Where do we go from here? The decline from 1.3680 has been choppy and certainly appears corrective. However, the series of lower highs and lower lows is, by definition, a downtrend and could be either a series of 1st and 2nd waves lower or a diagonal (labels not shown) in the 1st wave position. Short term, reward/risk favors longs since it remains possible that an A-B-C correction (shown on chart) ended at 1.3403, but watch potential resistance in the 1.3509/74 zone (38.2% - 61.8% of 1.3680-1.3403) for a reversal.

Strategy: Until the pattern clears up, we are looking for opportunities elsewhere

Commentary: No change from yesterday: “It looks like the USDJPY may be in a small triangle (wave iv of Y) that will give lead to a terminal thrust above 121.88 before the reversal. Coming under the confluence of the trendline drawn off of the 4/19 and 5/11 lows / 5/25 low at 120.85 would signal a reversal. In this case, we would be bearish against the swing high (currently 121.88). The entire rally from 115.14 may be a double zigzag correction. Our working assumption is that the USDJPY will thrust higher (above 121.88) following more consolidation between 121.29 and 121.75 before a reversal. This remains the outlook unless the trendline is broken.”
Strategy: Bearish on a break below mentioned trendline

Commentary: No change from yesterday: “The bullish scenario that we have been focusing on is playng out. We wrote two days ago that a second wave is currently unfolding that could draw price back to the 61.8% of 1.9676-1.9898 at 1.9761. This would allow us to align with the bull trend. The 2nd wave dropped to 1.9732 yesterday. Our working assumption is that wave 3 (higher) is underway. A rally through former support at 1.9790 would confirm the bullish count. 1.9676 must hold in order for us to be proved correct. A drop under 1.9676 has bearish implications that we?ll address if price action dictates.”
Strategy: Bullish if 1.9791 trades before 1.9676, against 1.9676 (we?ll publish targets if price action confirms our bias)

Commentary: With the USDCHF holding trendline support and with the decline from 1.2329 unfolding in a clear 3 wave correction, we are bullish against 1.2197 and looking for a break above 1.2329 and eventual test of channel resistance. The upper end of the channel is currently at 1.2402 and increases about 12 pips per day.
Strategy: Bullish now, against 1.2197, targeting break above 1.2329

Commentary: The USDCAD continues to drop below every measured objective for the end of large larger wave 3. The last of these was the 161.8% of 1.1168-1.0965/1.1061 at 1.0733. The next measurement for wave 3 is where wave v of 5 of 3 would equal wave i of 5 of 3. This is at 1.0666, 19 pips below yesterday?s low at 1.0685. We have refrained from trying to catch this bottom because there is no evidence that a bottom is in place. The most aggressive trader may look to establish a long position on a rally through yesterday?s high at 1.0756.
Strategy: None

Commentary: The break through short term trendline resistance following the 3 wave correction from .8390 sets the stage for a re-test of .8390 (and likely break above in a 5th wave). Support should be strong at .8211 and price must remain above .8162 in order for us to remain bulls. We?ll watch the form of the advance and publish bullish targets when price action dictates.
Strategy: Bullish now, against .8162, targeting a break above .8390

Commentary: Kiwi looks just like the AUDUSD. The 3 wave correction that ended at .7237 is bullish and Kiwi is breaking through a resistance line drawn off of the 4/26 and 5/15 highs. Support should be strong at .7299 and price must remain above .7237 in order for us to remain bulls. Similar to the Aussie, we are expecting a break above .7491 in a 5th wave.
Strategy: Bullish now, against .7237, targeting a break above .7491

*JTREND is a proprietary calculation that uses recent highs, lows and closes to determine the trend. JTRENDLT is the longer term trend and uses the last 4 weeks of price data. JTRENDST is the shorter term trend and uses the last 5 days of price data. An example is below. Blue bars denote bullish trend and red bars denote bearish trend. The chart below is the EURUSD weekly chart.