Commentary - "We are treating the rally from .8746 as wave B in a correction from .9513. We favor this view because the rally from .8749 is not a clean 5 wave impulse that would typically signal the beginning of a 3rd wave. Wave C should be underway now and we expect the pair to drop below .8746 in order to complete larger wave 2 in the next several weeks. We expect the bottom of wave 2 to be within the .8503-.8653 zone. .8503 is where wave C of the correction would equal wave A. .8653 is the 61.8% of .8119-.9513."
Strategy - Waiting for wave 2 to finish below .8746 so that we can align with wave 3 higher
Commentary - We were looking for the correction to end near 104.00 last week before the next big leg down. The top came at 103.63 and the AUDJPY has plummeted since. Price is close to testing the 100% extension of 107.70-99.45/103.63 at 95.37. Based on the outlook for the USDJPY and the AUDUSD (both may be close to near term bottoms), this is not the time to get aggressive. We expect some consolidation/correction before a test of 95.37. At this point, we are unsure of the near term downside potential.
Strategy - Remain bearish, move risk to 100.57 (from 107.70), targets at 95.37 and 90.27
Commentary - We wrote last week that “the pattern is not especially clear and the pair is coming up on potential resistance from a line drawn off of the 11/27/06 and 5/10/07 highs. A daily close above this line instills confidence in the bullish bias.” The AUDNZD closed above the line the on 8/9 (last Thursday) and the pair has rallied to above 1.1500. The next level of potential resistance is the October 2006 high at 1.1659. Look for a correction to bottom near the 23.6% of 1.0911-1.1584 at 1.1425 (or the 38.2% at 1.1327).
Strategy - Remain bullish, move risk to 1.1124, target TBD