Euro Crosses Maintain Upside Potential


EURJPY – “It remains our contention that 153.66 marks the bottom of a wave 4. A break above 158.04 would signal that wave 5 is in progress.” 158.04 gave way on 1/24 but the breakout was false as the pair immediately retraced back to below 156. Still, the bias remains bullish above 155.76 as the decline from 158.65 to 155.76 was in 3 waves (corrective). A break above 158.65 signals a resumption of the uptrend with focus on the October 1998 synthetic high at 164.53. Looking at long term monthly chart, it is fairly obvious that this rally is a larger C wave that began at 124.17 in November of 2003. Taking advantage of our knowledge that the A and the C waves tend to be close to equal, a projection for the end of the long term EURJPY rally is at 176.42. A drop below 155.76 ruins the short term bullish structure. 153.66 needs to hold in order to keep the medium term bullish structure intact.

EURCHF – The push through 1.6171 indicates that wave 5 has been in progress since 1.6058. Focus has shifted to the 161.8% fibo of 1.5847-1.5032 at 1.6348. This rally will complete a larger 3 wave advance from 1.4395. The A and C legs of the advance from 1.4395 would be equal at 1.6484, at which point a risk of reversal is high. 1.6171 is key to the near term bullish case.

EURGBP – EURGBP is turning up from 3 year support. Risk is well defined by last week’s low at .6534. The initial rally off of the low at .6534 to .6603 is either an A wave (in which case this is a correction) or a 1st wave. Even if this is simply a correction, the upside is favored until at least .6640 – which is where the distance from .6534 to .6603 would equal the distance from .6571. Remember, even corrections unfold in at least 3 waves. The near term bull is best served by price holding above .6571.