Was 1.6018 THE top that we were looking for. The intraday pattern suggests so. Resistance should be strong in the 1.5800 area and the EURUSD should remain below 1.5870. The bearish objective is not until below 1.5342.
Finally, a top appear to be in place. Remember, we had treated the advance from 1.5342 as an ending diagonal and suggested yesterday that the top may be in at 1.6018. Today’s decline obviously reinforces that view. We’ll focus on the very short term pattern this morning for timing purposes. With respect to the count shown above, 1.5870 is a 3rd wave that will extend lower, and probably quickly. Expect a rally to end in the 1.5775/1.5815 as wave ii of 3. One can argue that wave 2 is inordinately small, but this is a MAJOR turn and markets typically do not allow many people in at major turns. In other words, many will wait for a larger correction that never happens. Resistance is strong in the 1.5775/1.5815 zone.
STRATEGY: Look to get short in the 1.5775/1.5815 zone, against 1.5905, target below 1.5342
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There is no change to the USDJPY count. We expect the decline to accelerate soon. “The best count for the USDJPY from 95.72 is a double zigzag (a-b-c-X-a-b-c). With the second zigzag close to equal with the first zigzag, a bearish bias is warranted against 104.64. Those with a longer term horizon can keep risk above 107.20. The rally from 95.72 is a 4th wave within the 5 wave drop from 114.65 and the objective is below 95.72.”
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STRATEGY: Bearish, against 104.64, target below 95.72
We are treating the drop from 2.0396 as a leading diagonal (wave 1 of C within the A-B-C decline from 2.1160). Under this interpretation, the GBPUSD rally from 1.9599 is wave 2 within the 5 wave drop (wave C) from 2.0396. We wrote yesterday that “with the rally to 2.0025 in 3 waves and with waves i and ii of the next leg down possibly complete at 1.9997, a bearish bias is warranted against that level.” Cable has dropped, tested 1.97 this morning, so the bearish bias is correct to this point. Coming below 1.9599 would bolster this outlook. Near term resistance is at 1.9820.
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STRATEGY: Bearish, against 1.9997, target below 1.9337
We stood down from the bearish bias yesterday due to the lack of clarity that the drop from 1.0283 provided. This proved wise given the 250 pip rally from Tuesday’s low (to this point). Still, the structure of the rally from .9871 is unclear. The advance is most likely a C wave that could test 1.0473 (where C = A).
We remain aggressive USDCAD bulls as advances since the .9055 low are in 5 waves and declines are in 3 waves. Near term, price should remain above .9998 and we will not even think about an objective until the pair has exceeded 1.0324.
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STRATEGY: Bullish, against .9987, target above 1.0324
The rally from .7673 is the final leg of the diagonal. Each leg of a diagonal unfolds in 3 waves (A-B-C). Wave C of this final leg is from .8512. Objectives for the end of the rally are at .9936 and 1.0238. As long as price is above .9270, another leg higher is likely. Strong support is at .9435 (near current price) and .9389. If we get 5 waves down from .9541, then we’ll get bearish against that level.
The intraday patterns remain a mess so we are sticking with the bigger picture. An a-b-c (corrective) advance may be complete at .8033. Our longer term bias is that a large wave B of an expanded flat is complete at.8215 and that the NZDUSD is headed lower in a C wave that will eventually drop below .5927. The combination warrants a bearish bias. Risk can be moved to .8033
STRATEGY: Bearish, against .8033, target below .7781
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[1] STRATEGY is a summary of our best technical ideas. The ideas are subjective and are subject to change everyday although trades are typically held for at least a few days and sometimes a few weeks or more. Ideas are also included for crosses throughout the week; these are published at separate articles at DailyFX.