[B]- Euro Short Term Bull Above 1.3420
- Japanese Yen Signs of a Reversal
- British Pound Cautiously Bullish
- Swiss Franc Near Channel Line
- Canadian Dollar Puts In Low at 1.0776?
- Australian Dollar Testing Resistance Line
- New Zealand Dollar Bounces but .74[/B]
Commentary: We wrote yesterday that “with the decline from the top looking corrective (as opposed to impulsive), and with the a and c legs of the correction close to equal (218 and 199 pips), there is potential for a sizeable rally as long as price turns higher from close to current levels. Although reward to risk favors longs here in the short term, we are wary of getting too aggressively bullish longer term due to the extreme sentiment (USD bearishness/Euro bullishness), as evidenced by the COT report. The favored wave count does indicate one more high above 1.3680 in a 5th wave before an impulsive decline occurs. We are willing to take a bullish stand against the swing low (1.3410) for an eventual retest of 1.3680. Intraday bullish divergence with oscillators on the hourly favors a turn higher as well.” Short term support should be strong at 1.3460/70 and we can raise our stop to 1.3420. The 161.8% extension of 1.3410-1.3470/1.3420 at 1.3517 could offer short term resistance.
Strategy: Bullish against 1.3420, targeting 1.3680
Commentary: We wrote yesterday that, “we expect a new high (above 121.86) followed by a reversal.” The USDJPY pushed to 121.88 Friday before coming off 70 pips. There is no sign of a reversal but coming under 121.18 before touching 121.59 would make the decline from 121.88 impulsive (5 waves down) and signal that lower prices lie ahead. The entire rally from 115.14 may be a double zigzag correction. We wish to get bearish on a decline below 121.18. Risk is 121.88 and we?ll have to watch how the decline unfolds before we can limit? profits.
Strategy: Bearish if 121.17 prints before 121.59, against 121.88, target TBD
Commentary: The bullish scenario that we have been focusing on is playng out as Cable pushed above 1.9892 this morning. The push is either a small degree 5th wave or the beginning of a larger 3rd wave. Either way, the outlook is bullish as long price remains above 1.9676. In the former scenario, a second wave is currently unfolding that could draw price back to the 61.8% of 1.9676-1.9898 at 1.9761. This would allow us to align with the bull trend. Short term support is also at today?s low of 1.9817. The pattern is not as clear as the EURUSD, therefore we think that the EURUSD offers better opportunities.
Strategy: Waiting for correction to get bullish against 1.9676 targeting a retest of 2.0131.
Commentary: We have continually stated that “potential support is at the confluence of the 61.8% of 1.2124-1.2230 / channel support near 1.2203. Former resistance at 1.2221 could act as support also. In fact, the decline from 1.2329 would equal the 1.2329-1.2239 decline at 1.2222. This intersects with channel support early next week. High reward/risk bullish opportunities come to the forefront at channel support.” The USDCHF is just above the cited levels now and we would like to see the pair touch channel support and hold before getting bullish against 1.2124. If the support line fails to hold, then we?ll reassess the situation.
Strategy: Establishing bullish position between 1.2200 and 1.2230 following tag of channel support, against 1.2124, targeting new highs (above 1.2329)
Commentary: The USDCD is close to putting in an intermediate term low. A measured objective for the end of this small degree 5th wave is at the 161.8% extension of 1.1168-1.0965/1.1061 at 1.0733 but a rally through 1.0869 would suggest that a low is in place at 1.0776. Expectations are for a larger 4th wave to bring price back near 1.1000/1.1168. Without concrete evidence of a low in place, and the fact that the upside is countertrend, we prefer to watch how the correction unfolds and look to get bearish for the eventual 5th wave decline to a new low. The corrective move higher is likely to unfold as a flat or a triangle (since the 2nd wave was a sharp correction).
Commentary: We maintain that a C wave decline is underway towards the 100% extension of .8390-.8168/.8349 at .8127. Bears are in control as long as .8265 remains intact. .8127 would be where wave C would equal wave A. A break under .8168 would support our view. The AUDUSD is testing resistance right now from a short term trendline drawn off of the 5/15 and 5/23 highs.
Strategy: Bearish against .8265 targeting .8127
Commentary: We maintain that a C wave lower is also unfolding from .7403 in Kiwi. Wave C would equal wave A at .7161. .7314 is short term resistance but the bearish structure remains intact below as long as price is below .7403. In the 5 wave rally from.6719 to .7491, the 5th wave is extended. 5th wave extensions are sometimes fully retraced so there is the possibility that Kiwi does not find solid support until .7082 (close to the 50% of .6719-.7491).
Strategy: Bearish against .7403 targeting .7161 and .7082.