Dollar Countertrend Rally Will Present Next Shorting Opportunity

The USDJPY broke below channel support that had contained price action since the low at 95.72. A corrective rally to 107.00/50 will present a shorting opportunity.

The longer term bullish bias remains favored as long as price is above 1.5303. The EURUSD is expected to exceed 1.6018 and continue on to all-time highs in the next few weeks. Beware though that a triangle may be unfolding right now. The advance from 1.5303 would be wave D and wave E would begin from below 1.5843 (now). E waves of triangles are usually sharp and deep; so it is probable that the decline would continue until 1.53/1.54. The other possibility is that larger wave IV ended at 1.5283. Even then, a corrective decline should bring the pair back to 1.5630/1.5685 before the bull resumes.

Visit our recently updated Euro Currency Room for specific resources geared towards this currency.

STRATEGY: Bullish, against 1.5468, target above 1.5843 (but beware of the triangle potential)

We wrote yesterday that “a drop below 107.10 could lead to a test of the support line near 106.40 (reinforced by the 6/11 low at 106.56). A break of that trendline would give us reason to get bearish this pair.” The USDJPY has broken below the trendline, giving rise to the possibility that the entire advance from 95.72 is complete (A-B-C). An advance into the 108.41-106.06 Fibo zone of 107.00/50 would present a shorting opportunity.

Visit our recently updated Yen Currency Room for specific resources geared towards this currency.

STRATEGY: Get bearish near 107.20, against 108.41, target TBD

A C wave (of either a triangle or flat) is underway. If a triangle, wave C likely continues until 2.02 (March 27 top). If a flat, wave C will continue through 2.04. Near term, look for support just below 1.98.

Visit our recently updated British Pound Currency Room for specific resources geared towards this currency.

STRATEGY: Bullish, against 1.9583, target 1 at 2.0175, target 2 TBD

The USDCHF is probably on its way to a new low. The advance from .9647 is in 3 waves and therefore corrective. A bearish bias is warranted against 1.0493. Near term, a corrective advance is required to make it safe to enter. Look for resistance near 1.0266. Price should remain below 1.0350.

The triangle is unfolding as expected. Expect wave E of the triangle to end near 1.00 (Fibo support at 1.0010). The 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 a test of 1.00 is probable in wave E of the triangle)

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. In fact, the decline from .9563 is what we want to highlight. Since that drop is clearly in 3 waves, it is highly probable that the AUDUSD will head to a new high. We had thought that a correction would unfold as a small 2nd wave yesterday but that has yet to happen. If a correction does unfold, then take advantage. Look for support near .9492.

STRATEGY: Bullish, against .9327, target TBD (but a corrective decline would present an opportunity to add to longs/join the party)

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. The up-down sequence from .7445 is probably waves A and B. Wave C is considered underway as long as price is above .7445. As such, a bullish bias is warranted against .7445 (for a push through .7646).

STRATEGY: Bullish, against .7445, target TBD

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