Dollar Bull Returns: This Time For an Extended Visit

  • Euro Rolls Over
  • Japanese Yen Returns With a Vengeance
  • British Pound Reversess?Again
  • Swiss Franc Choppy
  • Canadian Dollar Wave 3 or C
  • Australian Dollar Wave C Down
  • New Zealand Dollar Triangle Breakout

Commentary: The alternate bearish count should now be favored. This has the decline from 1.3838 as wave C of a larger A-B-C correction from 1.3852. Price is likely to continue lower towards the 100% of 1.3852-1.3608/1.3838 at 1.3595. The next bearish target is the 161.8% extension at 1.3445. The bearish bias is strong as long as price is below 1.3723.

Strategy: Bearish against 1.3824, targets 1.3600 and 1.3450

Commentary: We wrote yesterday that “larger wave 2 or B is expected to unfold from little if any below 117.18 and makes its way to the Fibo reversal zone of 119.83-121.47. The break above 119.09 indicates that the corrective wave is in its final leg towards 119.83-121.47. Wave c of the correction (from 117.95) would equal wave a (117.17-119.09) at 119.87. This level is reinforced by the 7/25 low at 119.79 (yellow circle). In summary, look for strong resistance just ahead of 120.00.” The USDJPY has reversed after the high made yesterday at 119.83. Price is likely to continue lower (below 117.18). This decline may be a 5th wave so be wary of being too aggressive on a break below 117.18.

Strategy: Bearish against 119.83, targets 117.18 and TBD

Commentary: We wrote yesterday that “the decline from 2.0461 is either wave b of a flat correction or wave C of a correction from 2.0651. Both cases are bullish near term and favor a rally through 2.0461.” We were clearly wrong here as price reversed prior to 2.0461 (high made at 2.0397). The best count has the decline from 2.0461 as large wave C in an A-B-C from 2.0654 (same as EURUSD). The rally to 2.0397 was likely small wave ii of larger wave C. The bearish targets that we focused on a few days ago are back in focus now (1.9989 and 1.9697).
Strategy: Flip back to bearish, against 2.0397, targets 2.0000 and 1.9700

Commentary: The structure is bearish as long as price is below 1.2165. But rally from 1.1815 is in 5 waves, which sets the stage for additional gains. Additional strength towards the 61.8% of 1.2165-1.1815 at 1.2032 may be needed before the next leg down. Remember that we are looking for a decline towards the measured objective at 1.1364 (the 161.8% extension of 1.2468-1.1960/1.2165). .
Strategy: Remain Bearish against 1.2165, target 1.1400

Commentary: We wrote yesterdat to “look for a thrust lower from a triangle to test either the 61.8% of 1.0340-1.0699 at 1.0477 or the 78.6% at 1.0417.” The thrust lower occurred and the USDCAD bottomed at 1.0462 yesterday. The pair should be in a rally leg that pushes through 1.0699 (likely next week). Target are 1.0821 (100% extension of 1.0340-1.0699/1.0462) and 1.1043 (161.8% extension). The rally from 1.0462 is either larger wave C or 3.
Strategy: Remain Bullish, against 1.0340, targets 1.0821 and 1.1043

Commentary: The Aussie has played out just as expected. We have maintained that “the decline from .8870 is the beginning of larger wave 4 within the 5 wave rally from .7268. Over the next several weeks, the AUDUSD could decline to the former 4th wave at .8162. Wave A of the decline ended at .8458 and wave B is underway now. Wave B is unfolding as a flat or triangle. If a flat, then price may top close to .8664 (50% of .8870-.8458).” The high this morning was at .8661 and the AUDUSD has reversed. Look for a decline below .8443 towards the 100% extension of .8870-.8458/.8661 at .8249.
Strategy: Bearish now, against .8661 targets .8249 and TBD

Commentary: We wrote of two scenarios yesterday. One had a flat unfolding, which means that a rally will occur towards the 38.2% of .8107-.7550 at .7762. The other was a triangle, which would lead to a thrust lower. We favored the flat scenario and were wrong in doing so as the weakness this morning gives scope to the thrust lower from the triangle. Look for a decline below .7531 towards chart support at .7452 (6/13 low).

Strategy: Flat
*JTREND is a proprietary calculation that uses recent highs, lows and closes to determine the trend. JTRENDLT is the longer term trend and uses the last 4 weeks of price data. JTRENDST is the shorter term trend and uses the last 5 days of price data. An example is below. Blue bars denote bullish trend and red bars denote bearish trend. The chart below is the EURUSD weekly chart.