Euro Bearish Potential on a Break Below 1.5726

Euro bearish potential is great on a decline below 1.5726 (Thursday’s low). Risk would be at 1.5916 and the target would not be until below 1.5342.


Short term intraday charts show that the decline from 1.5916 can be counted as an impulse. Given the possibility that the entire advance from 1.5342 is a B wave (a-b-c) in a flat from 1.5904, a bearish bias is warranted on a break below 1.5726. The bearish target is not until below 1.5342.

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STRATEGY: Bearish on a break below 1.5726, against 1.5916, target below 1.5342


We wrote yesterday that “the strong decline this morning may be the beginning of wave v within the 5 wave drop from 114.65. 5 waves down from 114.65 would complete larger wave 3 within the drop from 124.13.” As long as price is below 102.95, this remains our preferred outlook.

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STRATEGY: Bearish, against 102.93, target below 95.72


Bigger picture, we have been bearish due to the 5 wave decline from 2.1160 to 1.9337 and the 3 wave advance from 1.9337 to 2.0396. Therefore, expectations have been for Cable to accelerate lower in a C or 3rd wave. The pair has declined but in a choppy fashion. As long as price is below 2.0047, this bearish scenario remains a possibility. Ideally, price remains below 1.9842. If 2.0047 gives way, then we’ll propose an alternate.

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STRATEGY: Bearish, against 2.0047, target 1.86


Our short term count was thrown off track with recent weakness. We would like to show the bigger picture for perspective. One count treats the drop from 1.1105 as wave 5 within a 5 wave drop from 1.3295. Under this count, a major low is in place at .9647 and the USDCHF will work higher over the coming weeks and months towards Fibo resistance; which does not begin until 1.0840.


The drop to 1.0132 last night could be the small 2nd wave that we were anticipating. A break above 1.0223 would confirm this suspicion. 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). The drop to 1.0018 is wave 2 and wave 3 should be underway now; which will lead to a break above 1.0324 and much higher prices.

STRATEGY: Bullish, against 1.0018, target above 1.0324

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We are treating the decline from .9470 (which may have been a truncation) as a series of 1st and 2nd waves. This bearish count remains valid as long as price is below .9353. It is also possible that the .9496-.8952 decline and .8952-.9344 rally are waves A and B in a larger correction. Either way, we remain bearish as long as price is below .9344.

STRATEGY: Bearish, against .9344, target below .8952


[B]The short term structure has been impossible to count (there is no clear count in our opinion). For perspective, we are showing the daily. Our best long term count treats .8215 as a possible end to a large B wave within an A-B-C correction from the 2005 high of.7463. As such, a sharp C wave may be underway. A break below the support line drawn off of the August 2007 and January lows would inspire confidence in the bearish bias. [/B]
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[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.