Dollar Mixed Before Event Risk - Levels Clearly Defined

  • Euro Bullish Above 1.3400 but Be Careful
  • Japanese Yen Thrusts From Triangle
  • British Pound 1.9676 is Key
  • Swiss Franc Channel Holds
  • Canadian Dollar Holding 1.0700
  • Australian Dollar .8162 Key For Bulls
  • New Zealand Dollar Rally Headed to .7500


Commentary: Repeat - the decline from 1.3680 has been choppy and certainly appears corrective. However, the series of lower highs and lower lows is, by definition, a downtrend and could be either a series of 1st and 2nd waves lower or a diagonal (labels not shown) in the 1st wave position. Short term, reward/risk favors longs since it remains possible that an A-B-C correction (shown on chart) ended at 1.3403, but watch potential resistance in the 1.3509/74 zone (38.2% - 61.8% of 1.3680-1.3403) for a reversal.

Strategy: Until the pattern clears up, we are looking for opportunities elsewhere

Commentary: Coming under the confluence of the trendline drawn off of the 4/19 and 5/11 lows near 121.20 would signal a reversal. In this case, we would be bearish against the swing high (currently 121.88). The entire rally from 115.14 may be a double zigzag correction. We mentioned yesterday that “our working assumption is that the USDJPY will thrust higher (above 121.88) following more consolidation between 121.29 and 121.75 before a reversal.” This is what has happened, the question is where does the thrust end? The 100% extension of 115.14-119.84/117.60 is at 122.30. This is a possible reversal point.
Strategy: Bearish on a break below mentioned trendline

Commentary: We wrote yesterday that “the bullish scenario that we have been focusing on is playng out. The 2nd wave dropped to 1.9732 and our working assumption is that wave 3 (higher) is underway.” 1.9676 must hold in order for the bullish scenario to remain intact. A drop under 1.9676 exposes the 4/9 low at 1.9589. Preferably, 1.9732 holds for bulls.
Strategy: Bullish now, against 1.9676, targeting 2.0131

Commentary: With the USDCHF holding trendline support and with the decline from 1.2329 unfolding in a clear 3 wave correction, we are bullish against 1.2197 and looking for a break above 1.2329 and eventual test of channel resistance. The upper end of the channel is currently at 1.2402 and increases about 12 pips per day.
Strategy: Bullish now, against 1.2197, targeting break above 1.2329

Commentary: The USDCAD continues to drop below every measured objective for the end of large larger wave 3. The last of these was the 161.8% of 1.1168-1.0965/1.1061 at 1.0733. The next measurement for wave 3 is where wave v of 5 of 3 would equal wave i of 5 of 3. This is at 1.0666, virtually where yesterday?s low is. We have refrained from trying to catch this bottom because there is no evidence that a bottom is in place. The most aggressive trader may look to establish a long position on a rally through the 5/30 high at 1.0756.
Strategy: None

Commentary: The break through short term trendline resistance following the 3 wave correction from .8390 sets the stage for a re-test of .8390 (and likely break above in a 5th wave). Support should be strong at .8211 and price must remain above .8162 in order for us to remain bulls. We?ll watch the form of the advance and publish bullish targets when price action dictates.
Strategy: Bullish now, against .8162, targeting a break above .8390

Commentary: Kiwi looks just like the AUDUSD. The 3 wave correction that ended at .7237 is bullish and Kiwi is breaking through a resistance line drawn off of the 4/26 and 5/15 highs. Support should be strong at .7343 and price must remain above .7237 in order for us to remain bulls. Similar to the Aussie, we are expecting a break above .7491 in a 5th wave.
Strategy: Bullish now, against .7237, targeting a break above .7491
*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.