As long as price is above 1.4672 (ideally, price remains above 1.4744), we are bullish and expecting a rally to at least 1.4980 if not the Fibonacci zone, which does not begin until 1.5168.
As long as price is above 1.4672 (ideally, price remains above 1.4744), we are bullish and expecting a rally to at least 1.4980 if not the Fibonacci zone, which does not begin until 1.5168. Support is at 1.4770…coming much below there would begin to put in doubt the bullish outlook.
Price action over the last few days in the USDJPY has been brutal. Focus on the big picture and let things fall into place (as opposed to focusing on the details and clouding the big picture). The entire advance from 95.72 has now retraced 50% of the drop from 124.13. The rally from 95.72 is clearly NOT impulsive as well. Both of these points indicate the likelihood of an amazing shorting opportunity against 124.13, eventually. When will the corrective advance from 95.72 end though? The second leg of the correction would equal the first leg of the correction at 116.61, which is just below the 78.6% of 124.13-95.72 at 118.05. An area before that which could produce a top would be the 61.8% at 113.28. Shorter term, one could play a breakout above 110.65 for a test of one of these levels.
In last night’s technicals, we wrote that “there is a bearish count left that is valid. That count treats the rally from the low as a complex correction (W-X-Y) but wave 4 would be awfully large in relation to wave 2. Look for support in the 1.87/25 zone.” Clearly, we should have paid more attention to this count as it proved correct. Hindsight is 20/20 though. What is the probable path for sterling from here? A drop below 1.8212 would complete a 5th wave - we would then look for a bottom. Wave iv would equal wave i at 1.8332.
The USDCHF is testing the confluence of the 38.2% of 1.3284-.9647 / former resistance. The area should provide some opposition to additional gains. A push above 1.1040 faces resistance from the 2/13 high at 1.1105.
The deep drop does not change the corrective nature of the decline from 1.0726. As such, expectations are for a new high (above 1.0726) to complete the advance from .9974. Longer term objectives are at 1.08 (61.8% of the 1.1875-.9055 decline). While we can not confirm that a low is in place, we expect one to form soon.
The AUDUSD completed a 4th wave correction at .8813. The decline from there should come under .8591 in order to complete a 5th wave before forming a low that leads to a rally back into the .90s. There are former daily lows near .85 that should provide support.
The rally from .6824 is likely wave A of an A-B-C correction. Wave A took the form of a diagonal (leading). The next move should be lower in a B wave to at least .7038 and perhaps the 61.8% at .6973.
[B]Jamie Saettele writes [I]Forex Technicals: The Day Ahead[/I], Monday-Thursday (published at 6 pm EST), [I]Daily Technicals [/I] every weekday morning (9 am EST), COT analysis (published Monday mornings), and analysis of currency crosses throughout the week. He is also the author of Sentiment in the Forex Market.[/B]
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[B]Contact at <[email protected]>[/B]