The Top Ideas report released at the beginning of every week includes TREND analysis and SENTIMENT analysis. The STRATEGY table is updated everyday as risk and target levels change.
[B]ELLIOTT WAVE VIEW[/B]
A triangle as a 4th wave may be complete at the 2/7 low of 1.4438. Expectations are for a bullish breakout that in the coming weeks that completes wave 5 within the 5 wave advance from 1.3261.
Visit our recently updated Euro Currency Room for specific resources geared towards this currency.
We maintain that a triangle is complete at 1.4438. Recent commentary has focused on the ideas that “it looks as if the EURUSD could explode higher any moment now, given that the rally from 1.4438 may be a series of 1st and 2nd waves – a common pattern that occurs before a big move.” The big move is probably under way now. Risk can be moved to 1.4482 but ideally price remains above 1.4531.
Visit our recently updated Euro Currency Room for specific resources geared towards this currency.
STRATEGY: Bullish, against 1.4531, target mid 1.50s
Longer term, we maintain that a 12 year triangle ended at 124.13 in June 2007 and that the USDJPY is headed lower for a test of its 1995 low at 81.12. Since 124.13, the USDJPY has traced out a series of 1st and 2nd waves. The decline should accelerate in the next month or 2 in wave 3 of 3. This forecast remains intact as long as price is below 114.65.
Visit our recently updated Yen Currency Room for specific resources geared towards this currency.
Keep it simple – the USDJPY has consolidated for in a tight range for nearly a month now and looks ready to break higher. “After spending nearly a month in a tight range, the USDJPY is poised to break higher and test at least the mid 108s. A 61.8% Fibonacci is at 108.50 and a former congestion area is at 108.30. Although we remain long term bears due to the EW structure on the daily, COT data suggests that a more pronounced rally is possible if not probable.” An alternate count is in red and suggests that the USDJPY will exceed 110.11 before bearish potential. One reason that we think a bigger rally is underway is that the structure from 104.97 looks far from complete – as do the rallies in the Yen crosses. Risk can be moved to 106.99. Potential support is at 108.
Visit our recently updated Yen Currency Room for specific resources geared towards this currency.
STRATEGY: Bullish, against 106.99, target TBD
For the first time in months, the GBPUSD daily count is clear. The pair has declined in 5 waves from 2.1160, indicating that a significant top is in place. The 5 wave decline is viewed as either wave 1 in a 5 wave bear cycle or wave A in a 3 wave bear cycle. In other words, longer term bearish potential is great. The rally underway now is either wave 2 or B and we will look for a top in the 2.0033-2.0463 zone. This corrective rally probably lasts for weeks if not most of this month.
Visit our recently updated British Pound Currency Room for specific resources geared towards this currency.
We wrote yesterday that “the advance from 1.9386 could be a series of 1st and 2nd waves, so an ‘explosion’ higher this week seems possible if not likely. Cable’s ‘explosion’ appears to be underway. Ideally, price remains above 1.9548 and the GBPUSD takes off in a 3rd wave.” The count from 1.9386 is impulsive but far from complete. The next level of potential resistance is at 1.9787. Risk can be moved to 1.9548
Visit our recently updated British Pound Currency Room for specific resources geared towards this currency.
STRATEGY: Bullish, against 1.9548, target above 1.9957
A corrective 4th wave rally may be underway now within the 5 wave decline from the October 2006 high at 1.2768. The USDCHF will likely trade in a choppy manner for the next month or so, but with an upside bias before a decline in a 5th wave completes the entire decline from the October 2006 high and gives way to a multi-year low.
A triangle is probably unfolding right now in the USDCHF. The decline from the 1/22 high at 1.1122 is in 3 waves (A-B-C zigzag) and the rally from the 2/1 low at 1.0728 is also in 3 waves (complex W-X-Y advance). Expect price to work lower in a choppy manner towards the mid 1.08s over the next few weeks.
The pattern in the USDCAD since the November low at .9055 is either an A-B-C rally that will lead to a new low (under .9055) or a 1-2 (expanded flat) base that will lead to a strong rally to new highs (suggesting that a multi-year USDCAD low is in place). Either way, price will come below .9755. Potential support from Fibonacci is at .9652 and .9511.
Visit our recently updated Canadian Dollar Currency Room for specific resources geared towards this currency.
The decline from 1.0378 is clearly a 5 wave decline and an a-b-c corrective rally could be done at 1.0128 – very near the former 4th wave and 50% of 1.0378-.9872. If a larger upward correction is underway, then a test of the 61.8% at 1.0184 is possible. However, our stance is that the larger decline has resumed and that price is headed below .9755 is coming weeks.
Visit our recently updated Canadian Dollar Currency Room for specific resources geared towards this currency.
STRATEGY: Bearish, against 1.0128, target below .9755
As long as the AUDUSD rallies in 5 waves and declines in 3 waves, there is no reason to adopt a bearish outlook. The rally from .8512 is expected to exceed .9400 in the coming weeks. Objectives are near 1.00.
We wrote yesterday that “this count implies that wave 3 up is underway now and that the rally should accelerate. The rally has yet to do that, which calls into question our count. Still, as long as price is above .8817, we remain bulls. This setback in the AUDUSD presents a great bullish opportunity against .8874.” The AUDUSD has rallied nicely this morning but the decline from .9084 to .8923 appears to be in 5 waves, which would be bearish. As long as our bullish levels remain intact, there is no reason to change our outlook. At this point, risk can be moved to .8923 (from .8874).
STRATEGY: Bullish (now is a good time to initiate or add to this position), against .8923, target TBD
The drop on 1/22 to .7383 completed a large correction that had been underway since November. Like the AUDUSD, the NZDUSD trend remains up and an upside breakout will probably lead to a test of the July 2007 high at .8108.
[B]Another reason to be wary of the AUDUSD rally is that the NZDUSD structure looks bearish. The decline from .7966 to .7781 is in 5 waves and the rally from .7781 was an a-b-c rally with wave b as a triangle. The decline from .7956-.7814 is best counted as in 5 waves; and not having established a new low suggests that price will come under .7814 and then .7781 in coming days. [/B]
Tell us what you think about this report: contact the strategist about the article at <[email protected]>