Euro Bullish Breakout Opportunity

  • Euro Bullish Breakout Opportunity
  • Japanese Yen Selling Returns
  • British Pound Tests 1.9900
  • Swiss Franc Bullish Potential (USDCHF Bearish)
  • Canadian Dollar May Test 1.0340 Again
  • Australian Dollar Wave 4 Correction
  • New Zealand Dollar Confined to Range

Commentary: The bullish EURUSD scenario is playing out as expected. There is a slight change in the wave count from yesterday, with the result being a more bullish count. We see potential for a third of a third wave to unfold towards the 161.8% extension of 1.3370-1.3546/1.3450 at 1.3734. Keep risk tight though once price reaches 1.3626, which is the 100% extension. A top and reversal there would indicate that a larger bearish cycle is likely underway from the top at 1.3852 (the alternate count is shown in black). This near term bullish bias is best served with 1.3450 remaining intact.

Strategy: Bullish now, against 1.3450, targets 1.3620 and 1.3730

Commentary: It remains our working assumption that “the rally from 111.59 may be the first leg of a 3 wave correction that will be larger wave 2. Potential reversa points prior to 119.83 are 117.86 and 119.34 (50% and 61.8% of 124.13-111.59).” 5 waves down from 124.13 appear complete so we expect this rally from 111.59 to unfold in a corrective manner and challenge the mentioned Fibonacci reversal zone (117.86 or 119.34). Former support at 117.20 may now be resistance. Wave b of the correction that began at 111.59 may be complete at 113.98. A break above 115.50 gives scope to a test of the mentioned resistance levels.

Strategy: Flat

Commentary: We wrote yesterday that “it is still possible that the GBPUSD registers a new low (beneath 1.9651) in order to complete the decline from 2.0462, but it is also possible that a more bullish pattern is underway since the decline from 1.9935 is in 3 waves and the preceding rally from 1.9651 is an impulse (5 waves). The decline from 1.9935 also retraced about 61.8% of the advance from 1.9651. For this reason, a cautious bullish stance is warranted above 1.9743.” Cable has advanced to test the 1.9900 figure this morning and a push through 1.9935 strengthens the bullish case. Similar to the EURUSD, be careful if the 100% extension of 1.9651-1.9935/1.9743 at 2.0027 is reached as a top and reversal is possible there. A more bullish outcome has price testing the 161.8% at 2.0203. Either way, the near term bias is bullish as long as price is above 1.9743.
Strategy: Bullish above 1.9743, targets 2.0020 and 2.0200

Commentary: We wrote yesterday that “downside potential remains. A drop under 1.1993 would complete 5 waves down from 1.2215. If this happens, then we will look for a corrective rally in order to get bearish.” A truncated 5th may have ended at 1.2012 and a correction is palying out now. If this is the case, then look for resistance near 1.2130 (61.8% of 1.2215-1.1993). It is possible that the next big move will be a third wave down, in which case, 1.1815 would give way quickly to much lower prices.
Strategy: Look to get bearish near 1.2130, against 1.2215, target TBD

Commentary: We wrote yesterday that “with the decline from 1.0866 to 1.0531 in 5 waves, at least one more down leg is expected. 1.0657 is a potential reversal point (resistance) as is the 61.8% of 1.0866-1.0531 at 1.0738. Once we see evidence that the advance from 1.0531 is complete, we will publish bearish targets.” A top may be in place at 1.0666, although a more complex correction could unfold towards the mentioned 1.0738. Still, a cautious bearish bias is warranted against 1.0666. Look for a test of 1.0340 if 1.0531 gives way.
Strategy: Bearish against 1.0666, target TBD

Commentary: The AUDUSD has hardly budged therefore there is no change to the outlook. "The Aussie is in an interesting position right now. The advance from .7673 has stalled at the 38.2% of .8661-.7673. The rally is also in 3 waves so it is possible that a 4th wave is complete or close to complete at .8065. A drop under .7673 would complete 5 waves down from the top (.8870) and give scope to a large correction higher."
Strategy: Flat

Commentary: The same can be said for the NZDUSD as the pair remains confined to what we are treating as a 4th wave correction. “Kiwi is in a similar situation (compared to Aussie). That is, a 4th wave correction may be complete or close to complete at .7026. The 38.2% of .7701-.6639 is at .7045 and is potential resistance. A drop under .6639 would make the decline from the top (.8108) 5 waves. A large upward correction would follow.”

Strategy: Flat
***JTREND is a proprietary calculation that uses recent highs, lows and closes to determine the trend. JTREND uses the last 4 weeks of price data (highs, lows, closes). An example is below. Blue bars denote bullish trend and red bars denote bearish trend. The chart below is the EURUSD weekly chart.