- Euro May Trade In a Choppy Manner Near Term
- Japanese Yen 113.73 Short Term Resistance (USDJPY Support)
- British Pound Bullish Above 1.9743
- Swiss Franc Same as Euro (but Inverse)
- Canadian Dollar 1.0657-1.0738 Buy Zone (USDCAD Sell)
- Australian Dollar Giving Way to Wave 5?
- New Zealand Dollar Little Changed
Commentary: There is little change to what we wrote yesterday, although the pattern has cleared up a bit. “The decline from 1.3838 is either large wave C to complete an A-B-C correction, wave 3 in a bearish sequence that began at 1.3852, or larger wave A to begin a larger correction from 1.3852. A rally above 1.3546 would make the advance from 1.3360 impulsive (5 waves) and favor additional gains. A rally through 1.3608 would eliminate the idea that wave 3 down unfolded from 1.3838.” With the rally this morning leaving a clear 3 wave correction from 1.3546 to 1.3456, it looks as though 1.3546 will be breached. As mentioned though, once that level is broken, risk of a correction right back to 1.3456 (or lower) will is high.
Strategy: Wait for a rally through 1.3546 with 1.3456 intact, then a correction back towards 1.3456 (or lower). That will offer an opportunity to get bullish.
Commentary: It remains our working assumption that “the rally from 111.59 may be the first leg of a 3 wave correction that will be larger wave 2. Potential reversa points prior to 119.83 are 117.86 and 119.34 (50% and 61.8% of 124.13-111.59).” 5 waves down from 124.13 appear complete so we expect this rally from 111.59 to unfold in a corrective manner and challenge the mentioned Fibonacci reversal zone (117.86 or 119.34). Former support at 117.20 may now be resistance. Near term, 113.73 (61.8% of 111.59-115.50) should be solid support.
Strategy: Look to get bullish near 113.80, against 111.59, target 1 117.80
Commentary: We wrote yesterday that “Cable appears to have some additional downside potential, but not before a push through 1.9935 occurs in order to complete a corrective advance (wave iv) from 1.9651. Following the completion of wave iv, we expect price to register a new low (beneath 1.9651) in what will be wave v of 3. A larger 4th wave correction would be expected following the new low. This view is favored as long as price is below 2.0155.” It is still possible that the GBPUSD registers a new low (beneath 1.9651) in order to complete the decline from 2.0462, but it is also possible that a more bullish pattern is underway since the decline from 1.9935 is in 3 waves and the preceding rally from 1.9651 is an impulse (5 waves). The decline from 1.9935 also retraced about 61.8% of the advance from 1.9651. For this reason, a cautious bullish stance is warranted above 1.9743.
Strategy: Bullish above 1.9743, target TBD
Commentary: We wrote yesterday that “downside potential remains. A drop under 1.1993 would complete 5 waves down from 1.2215. If this happens, then we will look for a corrective rally in order to get bearish.” This pattern is the same as the EURUSD (but the inverse of course). It looks like price will launch an attack on 1.1993, so look for a pullback following a new low (under 1.1993). Initial resistance would be just under 1.2100.
Strategy: Following a new low (under 1.1993), look for a pullback towards 1.2100 in order to get bearish against 1.2215.
Commentary: For more on the USDCAD, see our special report at USDCAD - What’s Next. With the decline from 1.0866 to 1.0531 in 5 waves, at least one more down leg is expected. 1.0657 is a potential reversal point (resistance) as is the 61.8% of 1.0866-1.0531 at 1.0738. Once we see evidence that the advance from 1.0531 is complete, we will publish bearish targets.
Strategy: Look to gt bearish between 1.0657 and 1.0738, against 1.0866, target TBD
Commentary: The Aussie is in an interesting position right now. The advance from .7673 has stalled at the 38.2% of .8661-.7673. The rally is also in 3 waves so it is possible that a 4th wave is complete or close to complete at .8065. A drop under .7673 would complete 5 waves down from the top (.8870) and give scope to a large correction higher.
Strategy: Flat
Commentary: Kiwi is in a similar situation (compared to Aussie). That is, a 4th wave correction may be complete or close to complete at .7026. The 38.2% of .7701-.6639 is at .7045 and is potential resistance. A drop under .6639 would make the decline from the top (.8108) 5 waves. A large upward correction would follow.
Strategy: Flat
***JTREND is a proprietary calculation that uses recent highs, lows and closes to determine the trend. JTREND uses the last 4 weeks of price data (highs, lows, closes). An example is below. Blue bars denote bullish trend and red bars denote bearish trend. The chart below is the EURUSD weekly chart.
