Euro Commodity Crosses Long Term Bull Waves


Commentary - Short term charts are not clear so we are focusing on the longer term picture today. The most telling chart on any time frame remains the monthly. The bottom in July at 1.5474 was right at the trendline drawn off of the January 1989 and August 1997 lows. The strong rally from long term trendline support sets a bullish tone for the foreseeable future. Longer term traders should favor the bull side and a test of the potential resistance line drawn off of the August 1992 and October 1998 highs near 1.9000 late next year.
Strategy - Long term bullish against 1.5474, target 1.9000

Commentary - We maintain a bullish bias against 1.4124 near term. The entire rally from the June low of 1.4124 is a correction of the March-June decline. Corrections unfold in 3 waves (a-b-c) and the end of the correction (c wave) is usually the strongest move. It is likely that wave c began at 1.4195. Wave c (from 1.4195) would equal wave a (1.4124-1.4643) at 1.4714. The 38.2% of the March-June decline (1.5683-1.4122) is at 1.4718. This is the bullish objective.
Strategy - Remain bullish against 1.4124, target 1.4700.

Commentary - Given the high correlation between the AUD and the NZD, it is little surprise that the patterns in EURAUD and EURNZD are virtually identical. The structure of the rally since the December 2005 low is bullish. The December 2005-July 2006 rally (1.6326-2.0989) is either wave a within a correction of wave i within an impulse. The July 2006-July 2007 decline (2.0989-1.7029) is either wave b or wave ii. Either way, the decline is a correction of the advance, which means that 2.0989 will be exceeded. Fibonacci extensions determine bullish objectives and are at 2.1918 and 2.4924.
Strategy - Flat

Written by Jamie Saettele, Technical Currency Strategist of