Euro Bullish Potential Outweighs Downside Risk Near Term

  • Euro Bullish Potential Outweighs Downside Risk
  • Japanese Yen Correction
  • British Pound Additional Downside Potential
  • Swiss Franc Still Unclear
  • Canadian Dollar 3 Wave Correction Complete at 1.0866?
  • Australian Dollar Wave 4 Nearly Complete?
  • New Zealand Dollar Same as Aussie


Commentary: The decline from 1.3838 is either large wave C to complete an A-B-C correction, wave 3 in a bearish sequence that began at 1.3852, or larger wave A to begin a larger correction from 1.3852. A rally above 1.3546 would make the advance from 1.3360 impulsive (5 waves) and favor additional gains. A rally through 1.3608 would eliminate the idea that wave 3 down unfolded from 1.3838. At this point, upside potential outweighs downside risk in the near term.

Strategy: Flat


Commentary: We wrote last week that we were looking for larger wave 2 to eventually challenge 119.83 before the next big move down. 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).

Strategy: Flat


Commentary: Cable appears to have some additional downside potential, but not before a push through 1.9935 occurs in order to complete a corrective advance (wave iv) from 1.9651. Following the completion of wave iv, we expect price to register a new low (beneath 1.9651) in what will be wave v of 3. A larger 4th wave correction would be expected following the new low. This view is favored as long as price is below 2.0155.
Strategy: Flat


Commentary: The USDCHF remains the trickiest pair to get a hold on right now. We were prepared to turn bullish if the advance from 1.1815 traced out 5 waves. As it turned out though, the rally ended in 3 waves, therefore additional 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.
Strategy: Flat


Commentary: After hitting our first bullish target at 1.0821 (the USDCAD reversed at 1.0866), the pair has declined nearly 300 pips. A drop below 1.0559 would complete 5 waves down from 1.0866 and indicate additional bearish potential. Until then, upside potential remains.
Strategy: Flat


Commentary: 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: 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.