Despite the fast declines in some of the Euro crosses, the pairs remain bullish. New highs are expected for the EURGBP, EURCAD, EURAUD, and EURNZD. The EURCHF may have put in at least a multi-week low at 1.5326.
The EURGBP is nearing the end of a 5 wave rally that began back in January 2007. We wrote last week that “when wave 3 is extended (as it clearly is here), waves 1 and 5 tend towards equality. In this case, wave 5 (from .7391) would equal wave 1 (.6535-.6867) at .7723.” The pair blew by .7723 and shot up to .7910 yesterday. The next measured objective is where wave 5 is equal to 61.8% of waves 1 through 3. That level is at .8057. It does appear that additional gains are needed in order to complete 5 waves from.7391. Support should be strong in the Fibonacci support zone of .7791 / .7717.
Watch the 60 minute chart carefully. It is possible that a low is in place at 1.5326. If the EURCHF rally from this point unfolds in 5 waves, then the probability that a low is in place increases significantly. At this point, there are only 3 waves up, and therefore no evidence of a reversal.
We wrote last week that “our favored count for the EURCAD calls for a wave 3 of 3 (or C) rally to exceed 1.5200. An initial objective is not until 1.5906 (100% extension of 1.3285-1.5029/1.4162) but bullish potential is even greater.” The EURCAD made it to 1.5800 yesterday. Near term, a correction is playing out. Look for a drop to end near 1.5358 (38.2% of 1.4644-1.5800) before the rally continues.
We wrote last week that “it is very likely that a wave 2 low is in place at 1.5922 and that a longer term EURAUD uptrend is underway. Price is expected to eventually exceed 1.7159 although bullish potential is much greater.” The push through 1.7253 happened much earlier than expected. The rally to 1.7253 is probably wave 1 of larger 3. Support should be strong in the 1.6431/1.6745 zone. This is the 61.8% to 38.2% of 1.5922-1.7253 and the former 4th wave.
The pair is headed much higher in the coming weeks and months…above 2.0185 at minimum. With a wave 2 (or B) low in place at 1.8188 and with the EURNZD breaking through the 200 day SMA, our confidence that a longer term bull trend is underway is high. Ideally, price remains above 1.8960.
[B]Tell us what you think about this report: contact the strategist about the article at <[email protected]>[/B]
[B] [B]TREND ANALYSIS[/B] is based on a rolling pivot model. LONG TERM TREND is determined by the last 3 months of price data (high, low, close). SHORT TERM TREND is determined by the last 4 weeks of price data (high, low, close). R3, R2, R1, PL, PH, S1, S2, and S3 are provided to aid in identifying entries and exits. These are objective measures and our subjective analysis (STRATEGY) may differ.
[B]SCHEDULE[/B]
Monday: EURJPY, GBPJPY, CHFJPY, CADJPY, AUDJPY, NZDJPY
Tuesday: EURGBP, EURCHF, EURCAD, EURAUD, EURNZD
Wednesday: GBPCHF, GBPCAD, GBPAUD, GBPNZD
Thursday: AUDCHF, AUDCAD, AUDNZD
[/B]