The EURUSD has fallen materially overnight and is close to testing the psychological 1.55 level. Support should be strong in the 1.5450/90 zone. The drop from above 1.58 counts better as a correction than an impulse (to this point), so be careful of chasing the EURUSD lower.
We are not giving up on the bullish count until we see a clear 5 waves down from 1.5817. The decline, while sharp, could be a double zigzag. If this is a second wave, then it should come as no surprise that the decline is sharp (second waves are sharp so as to convince the majprity of market participants that the trend is back down). Look for support in the 1.5450/1.5490 zone (61.8% of 1.5283/1.5818 and 100% ext. of 1.5818-1.5608/1.5664).
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STRATEGY: Get bullish near 1.5450/90, against 1.5283, target above 1.6018
We are looking for a spike through 105.70 in order to complete the entire rally from 95.72. A push through 105.72 would be wave Z from 102.57 in what is a triple combination correction (W-X-Y-X-Z). Resistance should be strong near 107.00. Short term support is at 104.50.
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Support held just below 1.97 and a 4th wave should be complete at 1.9672. The corrective sequence took the form of a double flat (complex and labeled W-X-Y). Complex forms such as this are common in 4th waves. Risk can moved to 1.9671 and the target is above 1.9850 (at minimum).
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STRATEGY: Bullish, against 1.9671, target above 1.9850
We must respect the possibility that a larger correction is underway from .9647. To this point, both legs (from .9647-1.0624 and 1.0624-1.0216) are in 3 waves. This action has all the earmarks of a larger correction. As such, we are standing down from the bearish bias for now. If the advance from 1.0216 unfolds in 5 waves, then we’ll commit to the long side. That advance has yet to unfold as such.
We should know very soon whether or not we are completely wrong in our assessment of the USDCAD. We’ve been bulls and waiting for a buying opportunity. We were given that opportunity as the USDCAD dropped into support from the 78.6% of .9710-1.0324 at .9841 last week; a 100 + pip move off of the low is nice but a push through .9997 would inspire confidence in the bullish count. The pair must remain above .9710 for us to remain bulls.
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STRATEGY: Bullish, against .9710, target above 1.0324
The rally from .8952 is wave C of a large 5th wave diagonal that could extend to a measured objective just below 1.00 in coming weeks (.9936). Look for support near .9509 (and the line shown on the chart). A bullish bias is warranted against .9290.
The rally from .7536 is in 2 nearly equal legs, therefore it is possible that an important top will form soon and that Kiwi will retrace all of the rally from .7536. The decline from .7921 is not the clearest 5 wave drop but it can be counted as such. Therefore a bearish bias is warranted against .7921. Look for resistance near .7866.
STRATEGY: Get bearish near .7865, against .7921, target below .7536
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[1] STRATEGY is a summary of our best technical ideas. The ideas are subjective and are subject to change everyday although trades are typically held for at least a few days and sometimes a few weeks or more. Ideas are also included for crosses throughout the week; these are published at separate articles at DailyFX.