The US dollar is likely to fall over the next day or two but probably in a corrective fashion. EURUSD resistance is near 1.5475 and the bear trend is intact as long as price is below 1.5594. The USDJPY has broken below a support line that had contained price action since the low at 95.72. The next obstacle for bears is 103.20.
Our short term count has changed a bit but it is still very bearish. We are treating the decline-rally sequence from
1.5694 to 1.5361 to 1.5594 as waves 1 and 2 of larger 3 (or C). Previously, we had mentioned that our bias was bearish as long as price was below 1.5643; risk can be moved down to 1.5594 now. Near term resistance is at 1.5400 and the initial target is now 1.5050.
STRATEGY: Bearish, against 1.5594, targets at 1.5050 and below 1.50
Visit our recently updated Euro Currency Room for specific resources geared towards this currency.
“The structure of the rally from 95.72 is evidence that the larger trend remains down. The advance consists of overlapping waves and can be counted as a double zigzag (W-X-Y); which is two 3 wave segments connected by an X wave. The USDJPY is at a support line right now and coming under there as well as 103.20 would strongly suggest that a wave 4 top is finally in place.” The USDJPY has come under 104 and the mentioned trendline so a top may be in place. Stay bearish below 105.60.
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STRATEGY: Bearish, against 105.60, target TBD
Unfortunately, we were not patient enough with Cable as it has dropped the day after we stated that “our alternate count is beginning to look better than the favored. We had favored the idea that the GBPUSD was entering a 3rd wave decline (of C). However, if this count were correct, then the GBPUSD should have accelerated lower by now. Over the last 2 months, the pair has gone sideways and it is more likely that this serves to build a bullish base that will lead to a rally through 2.04. The decline to 1.9599 was likely an X wave.” The decline could still be an X wave but the drop this morning and price remaining below the trendline keeps the trend bearish. We’ll wait for either a better risk short opportunity or for evidence of a larger reversal (alternate) in wave Y.
Visit our recently updated British Pound Currency Room for specific resources geared towards this currency.
We favor the upside but not before a drop into the 1.0325/50 area. The decline to this level would complete a 4th wave within the advance from .9887 and give way to a rally through 1.06 and maybe into 1.10.
The USDCAD has frustrated us to no end lately. The drop below 1.0037 had negated our bullish bias but we were then looking for a drop into the area surrounding .9950 (61.8% fibo). The USDCAD decided to take off higher without visiting .9950, which leaves us flat. Longer term, we remain bulls due to the 5 wave advance from .9710 to 1.0324. Look for support near 1.0075.
Visit our recently updated Canadian Dollar Currency Room for specific resources geared towards this currency
We have been showing the longer term picture the last few days because the short term structure was unclear enough for us to take a stand. We still are not confident enough in the bear side of this market due mainly to the other pairs that are showing likely USD weakness over the next day or two. However, the structure shown above suggests that we’ll see at least one more bear leg in the AUDUSD. We’ll watch for now.
With the NZDUSD labeled the way we have it above, a bearish bias is warranted against .7935. The move down from there is viewed as wave iii of 3 in a bear cycle from .8215. Near term resistance is at .7780/.7840.
STRATEGY: Get bearish near .78, against .7935, target TBD
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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.