Near term, a drop below .7766 is likely. This decline may complete a 4th wave within the 5 wave bull cycle from .6535. It is also possible, however, that the decline extends into a new bear. A bearish bias is warranted against .8033. As the drop matures, we’ll be better able to determine whether the drop from .8097 is corrective or impulsive.
The 1.5326-1.6376 rally is in 5 waves, therefore expectations are for a similar 5 wave rally to succeed the corrective decline from 1.6376. We wrote last week that “the pair has already come into and bounced from the first support area; the 4th wave of one less degree at 1.6066. Therefore, it is possible that a low is in place at 1.6014. A bullish bias is warranted against there.” The EURCHF has played out as forecasted so there is no change the count. Expect a push through 1.6376 soon.
Longer term, there is no change to the call for a push through 1.6324. Near term, the rally from 1.5278 is not clearly impulsive and it is possible that price action since the March top at 1.6324 is unfolding as a triangle. Expect the range to tighten going forward if a triangle is underway. As mentioned, a thrust through 1.6324 is still expected; the triangle just delays the move.
The EURAUD has gone sideways for a few months now. With the lack of action, we thought we would take a look at a long term chart for perspective. One possibility is that a triangle is complete from the August 1992 top and that the next move is a bullish break from the triangle. If this is correct, then the EURAUD is forming a major low now. 1.5922 would be critical to this long term bullish bias.
Recent commentary was that “there is no change to our long-standing bullish bias. The advance from the December 2005 low to the July 2006 high was in 5 waves and the decline that followed was in 3 waves. As such, the trend is up and the minimum objective is above 2.1196 (July 2006 high).” The minimum objective has been reached, with the EURNZD hitting 2.13 this week. Keep risk at 2.0477 but it is probably best to sit tight with this trend since upside potential is significant. An objective is at 2.33 (161.8% extension) and the break of the 10 year trendline is unquestionably bullish.
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