Euro Commodity Crosses Stretched Short Term - Get Bearish on a Bounce


Commentary - The EURCAD downtrend continues. Looking back 10 years, daily RSI is at its lowest level (12). A pullback is certainly due but the trend is obviously down and the next month or two will likely see a test on the long term support line drawn off of the October 2000, July 2001 and March 2006 lows near 1.3709. Resistance on a pullback is at the 5/29 high at 1.4630.
Strategy - None

Commentary - We wrote last week that "the EURAUD broke below the 4/17 low (1.6196) today, signaling that the bear trend has resumed. The next bearish target is where the decline from 1.6593 (top of wave 3) would equal wave 1 (1.7041-1.6196) at 1.5747. The following bearish target would be the 161.8% extension, at 1.5229. Near term resistance is at 1.6086 and 1.6264. Use a 3 wave correction to one of these levels to align with the downtrend.
Strategy - Remain bearish, against 1.6482, targeting 1.5747 and 1.5229. Adding to position on a pullback towards 1.6086/6264

Commentary - From last week, “the decline below the 4/18 low (1.8128) today signals the resumption of the downtrend in the EURNZD. The wave structure is clear and the pair is in the 3rd of the 3rd wave, which is often powerful.” The next short term bearish target is where wave 3 of 3 (beginning at 1.8582) would equal wave 1 of 3 (1.9497-1.8128) at 1.7211." The EURNZD is closing in on our short term target, currently trading below 1.7700. Pullbacks should face stiff resistance in the 1.7944/1.8115 area. There may not be meaningful support until the low side of the potential channel (shown above), near 1.7150. Even then, we could see the pair drop right through.
Strategy - Remaining bearish, against 1.8582, targeting 1.7211 and bottom of channel, align with downtrend at 1.7944/1.8115