Euro Short Opportunity to 1.4000

  • Euro Reversal?
  • Japanese Yen Remains in Sleep Mode
  • British Pound Strong as a Bull
  • Swiss Franc Following Euro
  • Canadian Dollar Working Higher (USDCAD Lower) in a 5th Wave?
  • Australian Dollar Large Wave 3 Complete?
  • New Zealand Dollar Stalls at 61.8%


Commentary: We wrote yesterday that “an ending diagonal may be unfolding in wave 5 from 1.4040. This remains a possibility as long as price is above 1.4061. One more high may complete the larger advance near 1.4200. The upper diagonal line is close to 1.4200. A rally to there may complete the advance from 1.4041 and possibly a larger rally. A drop below 1.4111 signals a short opportunity against the high.” There is no change to the call for a top and reversal that brings the EURUSD back to at least 1.4040. The area surrounding 1.4200 should provide strong resistance.

Strategy: Short now, against 1.4205, target TBD

Commentary: “We have continued to state that we expect a return to 118.00 in order to complete wave C of the A-B-C from 111.59 and that this count remains favored unless price drops under 112.59.” This count is now favored as long as price is above 113.99. Near term, the subdivisions are not especially clear but there is no reason to change the outlook for a rally to exceed 117.12 (minimum) before a reversal opportunity presents itself.

Strategy: Remain bullish, against 113.99, target 118.00

Commentary: 2.0136 was our line in the sand for the bullish count and Cable has rewarded patience, pushing to 2.0326 this morning. Risk of a reversal outweighs the reward of gain in the near term as the pair trades at the upper end of its range. Also, given the possible ending diagonal pattern in the EURUSD that calls for a reversal, GBPUSD weakness seems probable. Also, the overlapping nature (yellow circle) of the rally from 2.0084 does not inspire confidence. The more bullish pattern that we thought was playing out is still valid but there is too much evidence to the contrary right now, which will keep us from being aggressive.

Strategy: Move to flat (from bullish)

Commentary: We wrote yesterday that “it is possible to count a 5 up from 1.1637 that may be complete at 1.1720. This is either wave A of a correction that has more room to the upside or wave 1 of a new bull cycle. Either way, near term support is at 1.1677 and a bullish bias is warranted against 1.1637.” After dropping to 1.1676, the USDCHF rallied higher in what may be wave i of 3 (or C). The pair is setting up for a strong rally as long as price is above 1.1676.
Strategy: Remain bullish, move risk to 1.1676 (from 1.1637), target TBD

Commentary: We have favored a larger correction to 1.0173 (former 4th wave) to unfold as wave iv of 3 before a drop to a new low in order to complete wave 3 and give way to a larger correction. Given the corrective nature of the advance from .9936, it is possible that wave iv of 3 is already complete so a drop to a new low may happen soon. There is no reason to get bearish now though, as we still expect a drop to a new low to be fully retraced since the decline would complete wave 3 within the 5 wave bearish cycle from 1.0866. Again, a larget wave iv would likely end near 1.0175.
Strategy: Flat

Commentary: The AUDUSD is completing larger wave 3 in the 5 wave bull cycle from .7673. We are expecting a correction could test .8610 before a rally to a new high in larger wave 5 (above .8870). The path is towards higher prices until the 5 wave advance from .7673 is complete so there is no reason to fade the strong bull move just yet.
Strategy: Flat

Commentary: With the appearance of 5 waves higher from .6824, we are expecting a correction back to at least .7468 and possibly .7304. The rally from .6824 is either the end of a correction (wave C) or wave 3 within a 5 wave bull cycle from .6639. Price has stalled at the 61.8% of .8108-.6639 at .7547.

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.