Consolidation at week-end presents dollar bullish opportunities going into next week.
We maintain that the spike to 1.5904 completed the entire rally from 1.4438. The decline from 1.5904 is the start of a larger 4th wave that should bring price back to 1.4650 (midpoint of the triangle that the EURUSD broke from). Near term, the drop from 1.5904 is a series of 1st and 2nd waves. Under this count, the decline from 1.5784 is wave iii of 3 of A and should accelerate next week.
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STRATEGY: Bearish, against 1.5784, target TBD
The up, down sequence from 95.72 is counted as waves A and B from 95.72. Expectations are for wave C to exceed 100.44 and test the area of the former 4th wave in the 101.40-103.60 zone. The 100% extension of wave A (where wave C would equal wave A) is at 102.38. Risk on longs can be moved to 97.66. It is also possible that wave B (from 100.44) is unfolding as a triangle. Still, price would remain above 97.66.
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STRATEGY: Bullish against 97.66, target 102
Bigger picture, we view the decline from 2.1160 as wave (A) in a larger A-B-C correction. Wave (B) was a clear 3 wave countertrend rally that ended just shy of the 61.8% level of A. Wave © is underway now and specifically, wave 1 of © is underway now. The longer term (8 to 12 weeks) target is near 1.8500. A drop below 1.9734 would complete 5 waves down from 2.0396 and complete wave 1 of C.
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STRATEGY: Bearish, against 2.0271, target 1.9540
The rally through 1.0051 strongly indicates that a low is in place at .9647. Similar to the EURUSD (but as the inverse), the rally from .9647 is probably a larger 4th wave. Expectations are for the rally to reach the 1.0730-1.1121 zone. Also like the EURUSD, the rally from .9647 is likely a series of 1st and 2nd waves. Under this count, the rally from .9868 is wave iii of 3 of A.
STRATEGY: Bullish, against .9868, target 1.07
The break above 1.0197 negates our bearish bias. Therefore, what was previously our alternate count is now preferred. The drop to .9710 completed an expanded flat from the December high at 1.0248. It is highly probably now that a multi-year low is in place at .9055. Objectives for the bull move that began at .9710 are near 1.09 and 1.1600. We will look for long entries going forward.
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Given the deterioration of the Aussie in recent days, our best count labels the rally to .9470 as a truncated 5th wave. Confidence in this count would be bolstered if the drop from .9470 unfolds in 5 waves. This would also make it likely that a multi-year top is in place.
[B]Our confidence in the bearish count that first proposed last Friday is growing as the NZDUSD has weakened. We view the rally from .6639 to .8215 as a large expanded flat (A-B-C). Wave C of that rally is an ending diagonal (waves 1-2-3-4-5 are overlapping and each subdivide into 3 waves). Bigger picture, .8215 may be the end of wave B from .5927. Price is expected to eventually come under .5927. We will discuss shorter term targets as the pattern evolves. Risk on shorts can be moved to .8173.[/B]
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[B]STRATEGY: Bearish, against .8173, target TBD [/B]
[B]Tell us what you think about this report: contact the strategist about the article at <[email protected]>[/B]
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[1] STRATEGY is a quick summary of our best technical ideas. The ideas are subjective and are subject to change everyday although trades are typically held for at least a few days and sometimes a few weeks or more. Ideas are also included for crosses throughout the week; these are published at separate articles at DailyFX.