A trader’s psychology that attends massive market movements is usually one of disgust for having missed out on the move. However, there is plenty of USD upside left and there will be countertrend movements along the way (markets are not linear). We’ll identify the completion of these corrections as they unfold.
The big picture analysis has been spot on but our short term timing has been anything but spot on. The EURUSD coming under 1.5283 satisfies minimum expectations for wave C of IV but expect additional losses over the next few weeks to 1.4668 (roughly). This is the 38.2% of wave III (1.2482-1.6018), and intersects with trendline support next month. This is the ultimate objective and we’ll look to position for the rest of the decline over the next few weeks. 1.5175 and 1.5250 are resistance levels going forward. The pair has sliced through the 200 day SMA, which is currently at 1.5225 (also potential resistance).
Visit our recently updated Euro Currency Room for specific resources geared towards this currency.
Bigger picture, we expect strength to end in the 113.25-116.65 zone (Fibo levels from the 124.13-95.72 drop) and give way to a long term reversal. The rally from 103.76 should complete the final leg in the larger corrective advance from 95.72. Short term, there are 5 waves up from 107.29 so expect a corrective decline to bring price back to at least 109.
Visit our recently updated Yen Currency Room for specific resources geared towards this currency.
The triangle scenario that we proposed was clearly wrong. However, the break below 1.9337 signals that the GBPUSD is headed to the 1.85/86 level. This is the confluence of the 61.8% of 1.7047-2.1160 / 100% extension of 2.1160-1.9337/2.0396 (C=A as well as former 4th wave). In other words, there is plenty of downside action left. Similar to the EURUSD, we’ll look to position for the rest of this decline. Former support at 1.9337 is now potential resistance.
Visit our recently updated British Pound Currency Room for specific resources geared towards this currency.
Different pair…same story. The bigger picture analysis has been correct but the short term analysis has been way off. We view the advance from 1.0010 as wave C of 4 (like the EURUSD…but as the inverse). A measured objective is at 1.0986 (C=A).
There is no change to the USDCAD analysis as the pair has blown through the first objective (1.05) and is nearing the second objective (1.08). “The USDCAD break higher from the triangle will complete a 3 wave corrective advance from .9055. Objectives are 1.05 and 1.08. The rate of change has accelerated recently, indicating that the advance probably will extend from near current levels.” Move risk up to 1.0448.
Visit our recently updated Canadian Dollar Currency Room for specific resources geared towards this currency
While we do not think that the USD has formed multi-year lows against the other pairs, we DO think that the USD has formed a multi-year low against the AUD (AUDUSD multi-year top). The speed of the reversal is what’s expected following completion of an ending diagonal (in this case, the end of that diagonal was wave C of an A-B-C from the 2001 low).
The NZDUSD has also entered into a long term decline. Our longer term objective is not until below .5927. However, there will be countertrend movements along the way. When these corrections do unfold, we’ll look to identify their completions.
[I]Tell us what you think about this report: contact the strategist about the article at <[email protected]>[/I]