Short term patterns suggest that the USD will weaken (expect against the AUD and NZD) in the coming days and maybe even weeks. Risk levels are clearly defined.
The decline from 1.6018 began as an impulse but has failed to continue as one. This does not necessarily mean that the EURUSD uptrend will resume (although it could) but it does mean that at least a sizeable bounce is due. The rally from 1.5283 could be a series of 1st and 2nd waves or wave i of a diagonal. Either way, look higher near term. Ideally, 1.5364 remains intact but coming under 1.5283 would warrant a bearish break strategy. To the classical chartist, price is forming a clear inverse head and shoulders pattern which would be confirmed on a break through 1.5570.
STRATEGY: Bullish, against 1.5364, target TBD
Visit our recently updated Euro Currency Room for specific resources geared towards this currency.
We remain bearish as long as the USDJPY is below 105.70. The potential for a sizeable decline in a 3rd of a 3rd wave within the bear cycle from 105.70 does exist. We wrote yesterday that “very near term, a poke through 104.04 is possible before the larger decline resumes.” That ‘poke’ has turned into a 100+ pip rally, which has us nervous but bearish potential warrants sticking with this count. The other side of a former support line has acted as resistance today.
Visit our recently updated Yen Currency Room for specific resources geared towards this currency.
STRATEGY: Bearish, against 105.70, target TBD
In Elliott, there is something to be said for the ‘right look’. Does the circled area look like a C (or 3rd) wave decline? We don’t think so either. It seems more likely then that a complex correction (W-X-Y) is unfolding since the 1/22 low at 1.9337. Within wave X, the two legs of the decline would be equal at 1.9228. This does not mean that Cable will reach that level but it is an area to expect support.
Visit our recently updated British Pound Currency Room for specific resources geared towards this currency.
The other USD pairs are showing strong signs of pending USD weakness and we have changed our count significantly regarding the USDCHF to reflect that. We view the rally from .9674 as an A-B-C advance (corrective) but this does not mean that the larger downtrend is back underway (similar to the EURUSD). The advance may well be the first leg in a larger, more complex upward correction but a sizeable decline is expected regardless (probably into parity).
STRATEGY: Bearish, against 1.0624, target below 1.0389
Coming under .9997 yesterday negates the near term bullish outlook. The development also confirms that the USDCAD is still in wave Y. The decline is expected then to continue until measured support, which begins at .9945 and extends until .9841. The larger bullish bias is valid against .9710.
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The bearish outlook that we have focusing on is still valid. “With 5 waves down from .9541 and a 3 wave rally potentially complete at .9506, at least one more bear leg is expected for the AUDUSD. The minimum objective is below .9290 and risk is at .9506. This is roughly a 1:1 reward/risk ratio at the current juncture but if the decline does materialize, there is the possibility that it extends whereas risk is set at .9506.” Move risk to .9479
STRATEGY: Bearish, against .9479, target below .9290
Recent commentary has stated that “although the major top is probably in place at .8215, the fastest part of the decline is probably about to begin.” This specific outlook (calling for the fat decline) holds as long as price is below .7727 (red line). We will begin to look for short term bearish targets in the coming days.
STRATEGY: Bearish, against .7727, 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.