EURUSD 1.3800 - Potential Psychological Resistance?

  • Euro Tests 1.3800
  • Japanese Yen In Limbo
  • British Pound Remains at Resistance Line
  • Swiss Franc Correction Playing Out
  • Canadian Dollar Back Below 1.0500
  • Australian Dollar Objective at .8726
  • New Zealand DollarClear Short Term Pattern

Commentary: No change regarding the EURUSD as the wave 5 within the 5 wave rally that began at 1.3261 is close to an end. We wrote yesterday that “the 5th of the 5th should exceed 1.3786” and the pair hit 1.3798 this morning. 1.3800 is psychological resistance but we need to see a ‘5 down? to suggest that the trend has turned.

Strategy: Move to flat (from bullish)

Commentary: The USDJPY bounce from 120.97 is still in 3 waves, but a rally through 122.52 would make the rally a 5 wave affair and strongly indicate that the entire decline from 124.13 was an a-b-c correction. Keep in mind that the longer term structure suggests that an A-B-C correction could extend to 128.00 before the larger reversal. Still, a bearish bias is warranted against 122.52, which is defended by the 61.8% of 123.47-120.97.
Strategy: Remain bearish, against 122.52, target 120.97

Commentary: “There is no sign yet of a reversal but the long term structure indicates reversal potential. Price has touched the resistance line from the ending diagonal. A terminal thrust through the line is possible but strength should prove temporary. We expect a reversal, and soon.” This morning?s high at 1.0365 may have completed the 5th wave of the advance 1.9621 and ultimately a much larger advance. Minimum expectations are for a return to the previous 4th wave at 2.0056.
Strategy: Flat

Commentary: “The USDCHF decline is back underway, as evidenced by the ‘5 down? from 1.2232 to 1.1920. Look for a period of consolidation/correction to play out in 3 waves. Our count on the daily has price declining below 1.1877 before any meaningful rally attempt takes place. The USDCHF is bearish below 1.2232 although price is unlikely to come near here.” That consolidation is playing out now and may print above 1.2068 in a c wave before the next leg down (as shown on chart).
Strategy: Remain bearish, against 1.2232, target TBD

Commentary: The reversal that we have been expecting may be underway and a cautious bullish bias is warranted as long as price is above 1.0476. Still, we would like to see a clear 5 wave advance to signal the turn and instill confidence in the upside. Coming under 1.0442 could see a test of the long term support line, near 1.0393. We are showing the weekly chart with the wave count to illustrate why the USDCAD is close to putting in a significant low.

Strategy: Flat

Commentary: The AUDUSD continues to chop higher in the 5th wave (of a 5 wave rally that began at .7415) of the 3rd wave ( of a 5 wave rally that began at .7268). The pair may continue to extend towards where wave v (from .8162) would equal wave i of 3 (.7415-.7979) at .8726. A wave 4 decline is eventually expected to bring price back to .8162 (or close to it).
Strategy: Flat

Commentary: The short term pattern in Kiwi has cleared up. A rally through .7838 would complete 5 waves from .7714 and set the stage for additional gains. On the other hand, if price comes under .7770 before rallying through .7838, there would only be 3 waves up from the bottom, which would set the stage for additional losses. We should know the expected future path of Kiwi within the next day.

Strategy: Flat
*JTREND is a proprietary calculation that uses recent highs, lows and closes to determine the trend. JTRENDLT is the longer term trend and uses the last 4 weeks of price data. JTRENDST is the shorter term trend and uses the last 5 days of price data. An example is below. Blue bars denote bullish trend and red bars denote bearish trend. The chart below is the EURUSD weekly chart.