The recent USD advance does nothing to alter our larger USD bearish outlook. Bigger picture, the drop from 1.60 in the EURUSD is viewed as nothing more than a 4th wave correction that will lead to a new high in July.
We maintain a bullish bias against 1.5300 but at the current juncture there are many different valid counts. Given the tendency for 4th waves to unfold in a complex manner, the rally from 1.5303 could be the final leg of a large B wave. It is also possible that a B wave is complete at the June 9 high. The alternate is very bullish and treats the rally from 1.5283-1.5817 as wave i and the decline to 1.5303 as wave ii. Under this count, wave IV is complete at 1.5283. In cases such as these, simply going with the break does not give one a high probability for success. For example, a drop below 1.5283 could complete a large C wave. Similarly, a push through 1.5843 could complete a large B wave. Given recent COT readings, we’ll stay bullish against 1.5303 since 2 of our counts call for a push through 1.5843.
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STRATEGY: Bullish, against 1.5303, target above 1.5843
We are waiting for the USDJPY correction to play out. The advance from 95.72 is most likely corrective, but there appears to be additional upside potential over the next month or so. 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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As long as advances are unfolding in 5 waves, we’ll maintain a bullish bias above 1.9469. Ideally, price remains above 1.9583 but a drop below there does not alter the count shown above. Remember, the larger count calls for a rally through 1.9850 and likely test of 2.00 in the coming weeks.
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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 could be a series of 1st and 2nd waves. However, confidence in this count is low as the pattern since 1.0540 is not indicative of a 3rd wave decline.
STRATEGY: EXIT
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 AUDUSD advance is tracking our preferred count, confirming that the decline from .9653 was corrective and that the pair is likely headed to a new high. “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).” Remain bullish as long as price is above .9327 but traders may wish to lighten up on a move through .9566 (shown above). This could complete a 1st wave and give way to a correction that comes back to at least .9492.
STRATEGY: Bullish, against .9402, target TBD (lighten up on a push through .9566)
Given the counts in the other USD pairs, it seems unlikely that the advance from .7445 is complete. However, the rally from .7445 consists of 2 nearly equal waves (a-b-c) and the drop from .7646 appears impulsive on very short term charts (a word of caution…anything under an hour is viewed with skepticism). Bigger picture, the NZDUSD is expected to advance to the 50% of .7921-.7445 at .7683 and perhaps even the 61.8%-78.6% at .7740-.7920. A rally to there would fill the 6/4 gap. As such, a bullish bias is warranted against .7445
STRATEGY: Bullish, against .7445, target TBD
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