The Dollar rally has a bit more to go over the short term, but the greenback is prone to a sharp correction. The GBPUSD exhibits the clearest pattern. Look for a low near 1.9470, for a bullish opportunity against 1.9337.
The larger EURUSD bias remains bearish. But one must be careful in attempting to enter short following a drop of nearly 600 pips from the top (1.6039) as this market is prone to a sharp countertrend rally. We are working under the interpretation that the drop from 1.6039 is wave C of an expanded flat that began at 1.6018 and will not end until below 1.5283. Very near term, expect a drop below 1.5445, which would possibly complete wave i of 3 down. A sharp rally back to 1.5515 or so would follow and present a high probability bearish opportunity against 1.5630. Trend analysis is bearish as price has broken below a trendline on the daily. Price is above the 21 day SMA and the SMA exhibits negative slope.
Visit our recently updated Euro Currency Room for specific resources geared towards this currency.
The USDJPY is at its highest since January. We expect strength to continue for weeks. Objectives are in the 113.25-116.65 zone. The rally from 103.76 should complete the final leg in the larger corrective advance from 95.72. Near term, a bullish bias is warranted against 107.65 (8/5 low) with the next level of resistance at 110.11 (1/9 high).
Visit our recently updated Yen Currency Room for specific resources geared towards this currency.
Remember, a triangle is most likely unfolding from the 2008 low (1.9337). We wrote yesterday that “wave d should end this week and give way to the final leg of the triangle. We’ll look for a top and reversal late this week or next week in order to position for the expected drop below 1.93 that will complete the entire bear sequence from 2.1160.” Expect a strong rally in wave e to begin soon. Potential support is at 1.9469 (6/17 low). See GBPUSD trade for more on this pattern.
Visit our recently updated British Pound Currency Room for specific resources geared towards this currency.
From 1.0010, 5 waves appear to be nearing completion. The bigger picture count calls for a rally to the 1.10 area (Fibonacci extension level at 1.0986 and former 4th wave congestion is near 1.10). Ideally, a corrective setback begins soon and brings price back near 1.03. At that point, a bullish bias would be warranted against 1.0010.
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. If a correction unfold, then look for support near 1.0350.
Visit our recently updated Canadian Dollar Currency Room for specific resources geared towards this currency
The structure of the near term decline all but confirms the call for a long term reversal and multi-year top. The drop from .9204 is most likely wave 5 in the 5 wave decline from .9849. A multi-week corrective advance should begin soon. Look for support just ahead of the psychological .90 figure.
The NZDUSD has entered a long term decline. Our longer term objective is not until below .5927. However, there will be countertrend movements along the way. With 5 waves down nearing completion from .7761 (as wave 1 of 3 of C), expectations are for a large countertrend rally to begin soon. Short term support and an area that could produce the short term bottom is just ahead of .70.
[I]Tell us what you think about this report: contact the strategist about the article at <[email protected]>[/I]