Expect USD strength for the next few days. Terminal thrusts from triangles in the USDJPY and USDCHF should lead to reversals near 104 and 1.04. Regarding the EURUSD, it appears that wave E of a triangle is underway from 1.5798 towards 1.56 or just below.
The EURUSD has hardly moved since yesterday and therefore there is no change to the near term structure. “Both legs of the down-up sequence from 1.5904 are not clear impulses. This makes it likely that a larger correction is underway; either a triangle or a flat. It is possible that waves A through D of a triangle are complete and that wave E is underway towards 1.5600 or just below. E waves of triangles are usually sharp and have a tendency to penetrate the lower triangle line. The triangle line crosses through 1.5590 today and 1.5620 tomorrow.
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Our confidence in the scenario that we have been expecting to unfold is increased due to the small triangle. Triangles are terminal patterns, meaning that the move from the triangles will lead to a reversal. “An A-B-C correction (as a iv wave within the 5 wave decline from 114.65) should come to an end this week or next. Wave C is viewed as underway from 98.56. Wave C would equal wave A at 103.88, very close to the former 4th wave extreme at 103.58. Resistance near the 104 area is reinforced by a resisting trendline that is drawn off of the 12/27 and 2/25 highs.”
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The decline has accelerated and we are confident that wave C (or 3) within the bearish cycle from 2.1160 has started. Remember, the longer term (a month or 2 out) objective is not until near 1.8500. Very near term, the drop from 2.0047 appears to be unfolding as an impulse, which inspires confidence in the larger bearish bias. 1.9745/55 should provide short term resistance.
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STRATEGY: Bearish, against 2.0047, target 1.86
Our short term preferred count is still bullish but not as bullish as before. As is the case with the USDJPY, a small triangle appears to be unfolding from the 4/3 high at 1.0216. A terminal thrust from the triangle would likely complete wave c within an a-b-c rally from .9871 and larger wave Y within a complex W-X-Y corrective advance from .9647. The initial bullish objective is where wave Y would equal wave W; at 1.0473.
STRATEGY: Bullish, against 1.0012, target TBD
Near term, the latest bull leg (.9710-1.0324) is a wave 1 impulse within a 5 wave bull cycle (wave i of 1 is a diagonal). We had previously treated the drop from 1.0324 as wave a in a larger a-b-c correction (wave 2) but the advance from 1.0018 is an impulse and is likely wave i of 3. As such, a bullish bias is warranted against 1.0018. Support should be just above 1.01.
STRATEGY: Get bullish near 1.0105, against 1.0018, target above 1.0324
There is no change to the count that we outlined yesterday. “We are treating the decline from .9470 (which was a truncation) as a series of 1st and 2nd waves. This bearish count remains valid as long as price is below .9353. The sharp drop from just below .93 presents a shorting opportunity against .9353.”
STRATEGY: Bearish, against .9353, target below .8952
[B]We remain bears longer term and of the opinion that a significant top is in place at.8215 (this may be the end of large wave B from .5927). Price is expected to eventually come under .5927 (in the coming months). Near term, the NZDUSD needs to stay below .8101 in order for the bearish count to remain favored. The pair is facing resistance from a short term trendline right now. [/B]
[B][/B]
[B]STRATEGY: Bearish, against .8101, target TBD [/B]
[B]Tell us what you think about this report: contact the strategist about the article at <[email protected]>[/B]
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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.