[B]• Euro Ending Diagonal Unfolding
• Japanese Yen Towards 115.50
• British Pound Testing Yearly High
• Swiss Franc Turn May Be Major
• Canadian Dollar Choppy
• Australian Dollar In Small Wave 4
• New Zealand Dollar Same as Aussie[/B]
Commentary: The ending diagonal scenario that we proposed appears to be unfolding. The rally from 1.4125 is wave iii of the diagonal and is likely to push a bit further so that it is longer than wave i of the diagonal. Waves i and iii would equal each other at 1.4458. The 161.8% exstension is at 1.4664. Downside potential at this point looks limited as wave iv of the diagonal will be the next downside action and that will be followed by wave iv higher to complete the advance. In summary, the short term trend remains up as long as price is above 1.4125 but the rally from here could be choppy.
Strategy: Remain bullish, against 1.4188, Target TBD.
Commentary: There is no change to the USDJPY as we believe that a larger correction is unfolding from 113.24. It is possible to count 5 waves down from 117.93 so a larger correction is due unless the decline is extending. Look for resistance at 115.56 (100% extension of 113.24-115.04/113.76…this is also close to the former 4th wave at 115.72) and the 61.8% of 117.93-113.24 at 116.14. Once we see evidence of a top, we will be getting aggressively bearish (and we’ll let you know here). Very short term traders might try and trade this small c wave higher with risk at 113.76.
Strategy: Flat
Commentary: The short term structure in the GBPUSD has been unclear for some time. Given that the EURUSD remains bullish and that the GBPUSD remains within its weekly bullish channel, a bullish bias is warranted for a potential test of the resistance trendline near 2.1000/2.1100. However, the alternate count treats the entire rally from 1.9651 as a large B wave, so be careful if attempting to play a breakout.
Strategy: Flat
Commentary: We wrote Friday that “we maintain that the drop below 1.1623 completed 5 waves down from 1.2468 and that a large rally is underway. Wave c within an a-b-c decline from 1.1785 may be complete (or close to it) as price is testing the 78.6% of 1.1599-1.1785 at 1.1639. A rally through 1.1703 instills confidence in the larger bullish outlook.” The USDCHF has turned higher this morning and there is no change to the outlook.
Strategy: Bullish, against 1.1599, target TBD
Commentary: The structure of the decline from .9734 looks like a larger B wave. The individual legs of the decline are all in 3 waves and the decline itself is in 3 waves. If this is a B wave, then price is likely to exceed .9734 before bearish potential comes to the forefront. There is the possibility that this is a more significant low as well but there is no evidence of a turn yet.
Strategy: Flat
Commentary: We wrote last week that “the rally appears to be in just the 3rd wave within the 5th so the AUDUSD should continue to extend higher.” Wave iii of 5 likely ended at .9271 and the decline is the beginning of wave iv within the 5 wave rally from .8750. As such, we do expect a new high in wave v (although this wave iv correction should take at least a few days). The support zone is the 23.6%-38.2% of .8935-.9271 at .9192 and .9143.
Strategy: Flat
Commentary: We presented the bullish count yesterday, which suggested that “a rally is likely to accelerate in a small 3rd wave. Price above .7467 keeps the trend pointed higher. Coming under this level triggers the bearish count.” Kiwi’s rally has continued and like the AUDUSD, a small wave iv correction should play out above .7601. The Fibo support zone is .7635/74. Eventually, we expect a new high (above .7738…likely with .7601 remaining intact).
Strategy: Flat