Euro Commodity Cross Rallies are Corrective


EURAUD - It is difficult to say whether or not the EURAUD bear trend is back on trend. The .6191-1.6590 rally is either a full A-B-C correction or just wave A of an A-B-C correction. We are favoring the former scenario because the decline from 1.6590 to 1.6209 looks impulsive. In the latter interpretation, this would have to be wave B and B waves are not impulsive. Therefore, the decline from 1.6590 is labeled as wave 1 (of the next larger 5 wave bearish sequence). Also, the rally from 1.6209 has stalled at the 61.8% of 1.6590-1.6209 at 1.6444. So, we bearish against the 5/4 high at 1.6590.

EURCAD - The EURCAD bear is in full force but is approaching potential trendline support drawn off of the February 2006 and October 2006 lows. This line is just below 1.4700. Wave structure also gives scope to a pullback. The 3rd wave of the decline, which began at 1.5509, appears to be in its final stages. Still, any bounce should prove corrective and give way to a 5th wave lower that would break below the mentioned support line. The momentum extreme (daily RSI) also favors a bounce will lead to a new low and create a divergence

EURNZD - The EURNZD has been slowly working higher from the 4/18 low (1.8128). The correction unfolding may extend to 1.8761. This is where the rally from 1.8128 would have two equal legs. This is also close to the former 4th wave (1.8853). 1.8761/1.8853 is a good level to align yourself with the downtrend.