British Pound Pattern Indicates Breakout Opportunity

  • Euro Working Towards 1.4000
  • Japanese Yen Small Triangle
  • British Pound Cable Could Break Out
  • Swiss Franc Working Lower in Wave 5
  • Canadian Dollar Breaks Neckline
  • Australian Dollar Triangle?
  • New Zealand Dollar Higher in Wave C


Commentary: There is no reason to change the outlook at this point for a new high (above 1.3852), especially considering that the pair nearly reached that level this morning. Very short term, there is risk of a larger pullback given the bearish divergence with RSI on the hourly. Still, the bias is bullish as long as price is above 1.3663.

Strategy: Remain bullish, risk is at 1.3663, target above 1.3852

Commentary: Near term, a small triangle has unfolded following the rally from 112.59. Look for a terminal thrust from the triangle to test the 61.8% of 115.63-112.59 at 114.47 before a top and reversal. The larger bearish bias is strong as long as price is below 115.63. We expect a drop under 112.59 following a top and reversal near 114.47.

Strategy: Look to get bearish near 114.47, against 115.63, target below 112.59

Commentary: We wrote yesterday that “we favor a drop below 2.0243 to complete a flat correction and then the strong rally. The bullish scenario is best served by this since the rally from 2.0243 takes on a 3 wave corrective form and is most likely a small wave b.” After dropping below 2.0243, Cable has turned higher and a third wave rally could be underway from 2.0235 after a series of 1 and 2 waves from 2.0043. The bullish objective is above 2.0654.
Strategy: Remain bullish, move risk to 2.0235 (from 2.0159), target above 2.0654

Commentary: The count that calls for a new low (below 1.1815) continues to track well. Continue to favor the downside and a break of 1.1815. A bearish objective is at 1.1793 (161.8% extension of 1.2215-1.1993/1.2151). We wrote yesterday that “resistance should be strong up to 1.1925 (former congestion). The next day could see some choppy trading take place in the wave 4 position before a test of 1.1815 and lower. Still though, favor the downside.” Wave 4 that we were expecting to take place may be complete at 1.1895.
Strategy: Remain bearish, move risk to 1.1895 (from 1.993), target 1.1795

Commentary: Is the USDCAD finally showing some directional bias? It appears that way as the pair has come under the neckline from a head and shoulders continuation pattern. Also, the decline from 1.0591 looks impulsive. Favor the downside for a test of 1.0340 as long as price is below 1.0591.
Strategy: Flat

Commentary: After breaking below the short term support line drawn off of the 8/29 and 8/31 lows, the AUDUSD rallied right back to .8290, negating our bearish bias. The pattern since the 8/27 high at .8333 is certainly corrective but so is the rally leg from .7673 to .8333. The evidence suggests that a large complex correction is unfolding and that there will be one more rally leg (above .8333). However, it is unclear whether or not this rally will occur before or after a drop below .8171. If a triangle is unfolding, then the break higher will occur with .8171 remaining intact. For this reason, a cautious bullish bias is warranted.
Strategy: Flat

Commentary: On Friday, we wrote “look for a drop below .6834 to complete the decline from .7272, which would be wave b in the correction from .6639. Potential support is the 78.6% of .6639-.7272 at .6775. A strong rally in wave c is expected to register a new (above .7272).” Afer dropping below .6834, Kiwi has reversed and is working higher so there is no change to the outlook for a continued rally. A bullish bias is warranted as long as price is above .6824.

Strategy: Bullish now, against .6824, target above .7272
JTRENDW uses 13 week RSI in order to gauge strength of trend. The trend is considered Bullish if the indicator registers a reading above 60. The trend is considered Bearish if the indicator registers a reading below 40. If the reading is between 40 and 60, then the reading is Flat. The JTRENDD uses 13 days of data. An example of JTRENDW is below for the EURUSD.