- Euro 1.3410 is Key
- Japanese Yen Small Triangle
- British Pound Bullish Against 1.9676
- Swiss Franc Bearish (USDCHF Bullish)
- Canadian Dollar Daily RSI at 20
- Australian Dollar Trapped Under .8200
- New Zealand Dollar Objective at .7161
EURUSD
Commentary: The drop below 1.3420 destroys the short term impulse pattern that we thought was unfolding. This leaves 3 waves up from 1.3410, which is corrective. One of two scenarios is likely to play out from here.
1.) A drop below 1.3410 leads to a test of trendline support near 1.3360. A drop under there indicates additional bearish potential.
2.) The EURUSD rallies without first dropping under 1.3410 and traces out either a flat (in which case resistance is at 1.3526) or a triangle (in which case resistance is at 1.3480). The flat scenario is more bearish.
The scenarios proposed above are all bearish and we are looking lower as long as price remains below the potential resistance line drawn off of the 4/30 and 5/16 highs. Price remains trapped below the 55 day SMA as well (on a daily closing basis).
Strategy: Until the pattern clears up, we are looking for opportunities elsewhere
USDJPY
Commentary: 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 (in bold)
GBPUSD
Commentary: The bullish scenario that we have been focusing on is playng out. We wrote yesterday 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 1.9735 this morning. 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)
USDCHF
Commentary: We wrote yesterday that “we would like to see the pair touch channel support and hold before getting bullish against 1.2124. If the support line fails to hold, then we?ll reassess the situation.” The confluence of the 61.8% of 1.2124-1.2230 / channel support near 1.2203 has held and we are bullish against 1.2197 targeting a break above 1.2329.
Strategy: Bullish now, against 1.2197, targeting break above 1.2329
USDCAD
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 today?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 break above former support at 1.0776.
Strategy: None
AUDUSD
Commentary: We maintain that a C wave decline is underway towards the 100% extension of .8390-.8168/.8349 at .8127. Bears are in control as long as .8265 remains intact. .8127 would be where wave C would equal wave A. A break under .8168 would support our view. The AUDUSD is testing resistance right now from a short term trendline drawn off of the 5/15 and 5/23 highs.
Strategy: Bearish against .8265 targeting .8127
NZDUSD
Commentary: We maintain that a C wave lower is also unfolding from .7403 in Kiwi. Wave C would equal wave A at .7161. .7314 is short term resistance but the bearish structure remains intact below as long as price is below .7403. In the 5 wave rally from.6719 to .7491, the 5th wave is extended. 5th wave extensions are sometimes fully retraced so there is the possibility that Kiwi does not find solid support until .7082 (close to the 50% of .6719-.7491).
Strategy: Bearish against .7403 targeting .7161 and .7082.