Euro 1.3680 In Sight but What Then?

  • Euro Measured Objectives Above 1.3700
  • Japanese Yen Alternate Count
  • British Pound Rally Perhaps a B Wave
  • Swiss Franc Also in a B Wave?
  • Canadian Dollar 1.0519 Bullish Pivot
  • Australian Dollar Regains .8600
  • New Zealand Dollar Decline is Corrective

[B]Commentary[/B]: We maintain that wave 5 within the 5 wave rally that began at 1.3261 is underway and is to exceed 1.3680 before a reversal with longer term bearish implications. A measured objective for the end wave 5 (that began at 1.3568) is the 161.8% extension of 1.3568-1.3640/1.3594 at 1.3711. Another measured objective for the end of the entire 5 wave rally from 1.3261 is where wave 5 (beginning at 1.3568) would equal wave 1 (1.3261-1.3437) at 1.3744.

[B]Strategy[/B]: If already bullish, remain so as long as price is above1.3594, look for a top at 1.3700/50.

[B]Commentary[/B]: See yesterday?s commentary for the price structure. We want to focus today on the recently released COT report. Speculative net positioning on JPY futures increased from record bearish levels last week. The same scenario occurred in late October 2006 and early February 2007. In each instance, the USDJPY formed tops that week and fell hard. Longs should be careful as sentiment is ripe for a top.
[B]Strategy[/B]: Move to flat, get bearish on trendline break.

[B]Commentary[/B]: There is no sign yet of a reversal but the long term structure indicates reversal potential. The upper resistance line for an ending diagonal from 1.8515 is at 2.0343 today. Short term, a cautious bullish stance is warranted against 2.0056. Be careful though because a push through 2.0203 would satisfy minimum expectations. Coming under 2.0056 would indicate additional bearish potential and indicate that either a wave c or a wave 3 is unfolding (we are showing this alternate count today).
[B]Strategy[/B]: Flat

[B]Commentary[/B]: We wrote yesterday that “the countertrend movement may have ended at 1.2232. If 1.2232 fails to hold, then a complex correction is playing out and we would look for resistance closer to the 61.8% at 1.2329.” Unfortunately, there is little to add today. It remains possible that a complex correction is playing out (which we are showing today) and only a decline below 1.2091 would confidently suggest that the USDCHF is headed lower.
[B]Strategy[/B]: Move to flat (as pattern is not clear enough to remain bearish).

[B]Commentary[/B]: We were too early in calling the turn but we still expect a reversal. The weekly chart shows why. A 5 wave decline from the 2002 high is nearing its end as evidenced by the ending diagonal (i-ii-iii-iv-v). RSI divergence is also evident on the weekly. A rally through 1.0756 would strongly suggest that a low is in place. We are looking for a 5 wave rally to get bullish against.

[B]Strategy[/B]: Flat

[B]Commentary[/B]: There is not much to add regarding the AUDUSD. The pair is right at potential trendline resistance drawn off of the August 2006 and April 2007 highs. This line and bearish divergence with RSI on the daily make getting bullish now a risky proposition. Getting bearish is difficult because there is no sign yet that the pair has reversed. We think that the best opportunity is to wait for a corrective decline to unfold before getting bullish for a run at a new high in a 5th wave.
[B]Strategy[/B]: Flat

[B]Commentary[/B]: See yesterday?s commentary for why we see potential for a longer term top to form. Kiwi has declined but the decline is corrective so far. Coming under .7690 would instill confidence in the longer term bearish outlook. The count remains bullish until that happens, as an impulse may be unfolding from .7452.

[B]Strategy[/B]: Move to flat

*JTREND is a proprietary calculation that uses recent highs, lows and closes to determine the trend. JTRENDLT is the longer term trend and uses the last 4 weeks of price data. JTRENDST is the shorter term trend and uses the last 5 days of price data. An example is below. Blue bars denote bullish trend and red bars denote bearish trend. The chart below is the EURUSD weekly chart.