The GBPUSD continues to track our preferred count well. The pair should exceed 1.9850 next week. The EURUSD has yet to break higher, but the pair has also failed to breach any support levels. A bullish bias remains warranted there.
We maintain a bullish bias against 1.5300 but ideally price remains above 1.5464 (yesterday’s low). The rally from 1.5303 to 1.5552 (last night’s high) is in 5 waves, which we believe serves as wave i of the next 5 wave cycle. A small second wave ended at 1.5464. If this count is correct, then wave iii is underway now and price will remain above 1.5464.
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STRATEGY: Bullish, against 1.5300, target above 1.5843
The advance from 95.72 is most likely corrective, but there appears to be additional upside potential. The first leg of the correction (95.72-105.70) consists of overlapping waves and is the first wave of a 3 wave sequence. The advance has formed a channel and the upper end of the channel is not until the 111/112 area. Also, the wave from 102.58 would equal the 95.72-105.70 advance at 112.62. A push through 108.57 and a test of 109 is probable. At that point, there would be potential for at least a medium term top.
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Minimum expectations are for the advance from 1.9409 to continue until at least 1.9850. The rally from 1.9409 unfolded as an impulse, which inspires confidence in our bullish count. We wrote yesterday that “price ideally remains above 1.9469 but the bias is bullish as long as the GBPUSD is above 1.9409.” Risk can be moved to 1.9469 although Cable shouldn’t come near this level. Look for short term support near 1.9660.
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STRATEGY: Bullish, against 1.9469, target above 1.9850
“There is little doubt that the advance from .9647 is corrective because a triangle separates the two legs. The only question is whether or not the rally from .9647 is a complete 3 wave rally or just the first wave of a larger more complex correction.” The down-up-down-up sequence since the 1.0624 top is most likely a series of 1st and 2nd waves. However, confidence in this count is low as the pattern since 1.0540 (circled) is not indicative of a 3rd wave decline. As such, we rescind the bearish bias for the time being.
STRATEGY: EXIT
As we had suspected, a triangle is unfolding. Expect wave E of the triangle (underway now) to be sharp and end below 1.00. This decline will present a high reward/risk opportunity against .9818. A breakout in larger wave C towards 1.05/08 is expected to follow completion of the triangle.
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STRATEGY: Bullish, against .9818, target above 1.0324 (but should be in a small position now since the triangle is unfolding, add to longs below 1.00)
The rally from .8952 is wave C of a large 5th wave diagonal that could extend to a measured objective just below 1.00 in coming weeks (.9936).” Lighten up on longs as the AUDUSD has run into resistance from a former congestion area just below .9500. Risk can be moved to .9388.
STRATEGY: Bullish, against .9388, target TBD
“There are 5 waves down from .7921. This drop either completes a large C wave or is wave 1 of 3 in a longer term decline. Either way, the NZDUSD is expected to advance in the coming weeks (and maybe months), even if just correctively. The 50% of .7921-.7445 at .7683 is likely and the 61.8%-78.6% at .7740-.7920 is possible, especially since a rally to there would fill the 6/4 gap. Risk can be moved to .7511.
STRATEGY: Bullish, against .7511, target .768 and TBD
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