Euro Impulse Rally Maintains Short Term Bullish Outlook

  • Euro Impulse Rally Maintains Short Term Bullish Outlook
  • Japanese Yen?Waiting For Breakout
  • British Pound Double Zigzag
  • Swiss Franc Bearish (USDCHF Bullish) Opportunity
  • Canadian Dollar Measured Objective at .9680
  • Australian Dollar to Make a New High but Reversal then Expected
  • New Zealand Dollar Flat Correction?


Commentary: We presented the most bearish count yesterday but also warned that “the entire decline may be just an a-b-c correction, which leaves the EURUSD vulnerable to another high (above 1.4281).” Short term price action has cleared things up. Yesterday?s rally from 1.4067 was an impulse and the decline since is corrective, so favor the upside and a test of 1.4281. Strength above 1.4281 (if price reaches there) should prove marginal though. We do expect at least a return to 1.3828 (former 4th wave) and possibly 1.3712 (61.8% of 1.3360-1.4281) over the next 3 to 4 weeks.

Strategy: Bullish now, against 1.4076, target 1.4230

Commentary: Guess what, there is no change to our outlook for price to break 117.12 and test at least 118.00. A rally to this level would complete an A-B-C corrective rally from 111.59. Price should remain above 115.28 and preferably 115.55 under this bullish interpretation. It is important to remember that we expect a top and reversal near 118.12 (100% of 111.59-117.12/112.59). A push through this level exposes the 61.8% of 124.13-111.59 at 119.34. See our Special Report from Wednesday on Yen that features charts of every Yen cross, the Dow, and 2 charts of the USDJPY.

Strategy: Remain bullish, risk at 115.55, target 118.00 (look for a top and reversal at 118.00/120.00)

Commentary: The double zigzag count that we proposed yesterday seems to be the correct count. We wrote yesterday that "if this is the case (double zigzag), then price will exceed 2.0494 before a reversal. All of the corrective action from the July high at 2.0654 suggests that a triangle or flat is unfolding. This is now our favored outlook so rallies should be sold against 2.0654 once 2.0494 is broken.
Strategy: Flat

Commentary: A bullish opportunity exists in the USDCHF. The rally from the low (1.1623) may be a 5 wave rally. Waves i and iv do overlap but Elliott?s rules allow for some overlap intraday with highly leveraged markets (FX and futures). We wrote yesterday that “under this interpretation, price should undergo a brief correction in either wave b or 2 with support strong near 1.1711. This would present an opportunity to align with wave c or 3 higher.” That correction is underway now. Expect small wave c of the correction to test 1.1696 (61.8%) / 1.1711 before the next advance begins.
Strategy: Look to get bullish close to 1.1711, against 1.1623, target 1 at 1.1900

Commentary: We have stayed away from ‘picking a bottom? in the USDCAD and for good reason. The wave structure was simply not complete. But, we are getting very close. The drop below .9910 this morning is likely the beginning of wave 5 lower within the 5 wave bear cycle from 1.0866. If wave 5 is to equal wave 1, then the USDCAD may not find a bottom until .9680. A small 5 wave advance followed by a 3 wave setback will turn us bullish for the large recovery. Watch the weekly and monthly pivot calculated pivot supports for possible reversal points (table on page 1)

Commentary: No change to the Aussie as things are playing out as expected. “With the decline from .8947 clearly a corrective one, we see it as probable that .8947 will be exceeded prior to a reversal. Impulses are always in 5 waves or derivations thereof (such as 9, 13, 17, etc.). A rally to a new high (even if just a slight new high) above .8947 would satisfy minimum expectations and then lead to a reversal. A large corrective decline should follow (possibly back to .8600).” Similar to the USDCAD, watch closely the calculated pivot resistance (on page 1 table) as well as the .9000 figure.
Strategy: Flat

Commentary: Kiwi has lagged a bit as price has stalled within the former congestion zone (.7531-.7731) but the decline from .7668 is clearly a 3 wave correction?so expect at least a test of the high prior to a larger setback that occurs over the next few weeks. With 5 waves already up from .6824, the decline from .7668 could be wave a of a larger correction, likely a flat. b waves in flats often test the origin of wave a and it is not uncommon for the b wave to exceed the origin of a. With that in mind, resistance above .7668 is the top of the mentioned congestion zone at .7731. A rally much above .7731 would require us to reassess.

Strategy: Flat
JTRENDW uses 13 week RSI in order to gauge strength of trend. The trend is considered Bullish if the indicator registers a reading above 60. The trend is considered Bearish if the indicator registers a reading below 40. If the reading is between 40 and 60, then the reading is Flat. The JTRENDD uses 13 days of data. An example of JTRENDW is below for the EURUSD.