• Euro In Larger Correction?
• Japanese Yen Towards 111.00
• British Pound Wave 3 Down To Begin?
• Swiss Franc Towards 1.1300
• Canadian Dollar Support at Par
• Australian Dollar Towards .9100
• New Zealand Larger Correction Underway
Commentary: It seems likely now that a top is in place for the EURUSD at 1.4967 until at least 1.4520. The decline from 1.4967 has either completed the first leg of a flat correction (3 waves down to this point) or a more bearish structure is unfolding now and the decline from 1.4908 is wave 3 within a 5 wave bearish cycle from the top. In the former instance, price could test 1.4967 before a larger drop. In the latter instance, price is likely to continue lower from current levels until 1.4600/15 (1.4613 is the 161.87% extension of 1.4967-1.4785/1.4908) before a bounce.
Strategy: Flat
Commentary: We wrote yesterday that “this rally could continue to at least the former 4th wave at 111.75.” With 5 waves down from 117.93-107.20, there is no change in the outlook for a larger recovery. Initial resistance is not until the 38.2% of the drop at 111.30. This level is defended by the former 4th wave at 111.76. As the structure of the rally unfolds, we will be better able to determine bullish targets.
Strategy: Bullish, move risk to 108.26 (from 107.21), target TBD (probably near 111.30/80)
Commentary: We are sticking with the bearish count. Under the bearish count, the decline from 2.1160-2.0522 is wave 1 in a 5 wave bear cycle. The rally from 2.0522-2.0844 is wave 2. The decline from 2.0844-2.0504 is wave 1 of larger 3. The choppy rally from 2.0353 to 2.0762 can be counted as a double zigzag, which fits as wave 2 of larger 3. As such, wave 3 of larger 3 may be about to begin now. If so, then price must remain below 2.0762 and the downside is much greater. Reward/risk favors bears.
Strategy: Bearish, move risk to 2.0762 (from 2.0844), target TBD (much lower)
Commentary: We have focused recently on the fact that the USDCHF is in a 5th wave (like the EURUSD) and that a turn was expected. The recent turn is either a correction in larger wave 4 within the 5 wave bear cycle from 1.2467 or is something more bullish. Either way, price is expected to challenge former congestion at 1.1300 in the next few weeks (if not sooner).
Strategy: Flat
Commentary: The large double zigzag that we proposed may be complete. The USDCAD has run into resistance from former congeston (circled) and the 50% of 1.0866-.9055 at .9961. Still, the rally from .9055 is likely just the first leg in a larger rally. Therefore, the expected setback offers an opportunity to get bullish. Potential support begins at .9703.
Strategy: Exit bullish position
Commentary: See yesterday’s report for the longer term count. Near term, the decline from .9399 could be just an a-b-c decline. This is suggestive of a resumption of the uptrend and eventual rally through .9399. The other count is bearish and suggests that an a-b-c flat correction is unfolding from .8753. In either case, price is expected to exceed .9068.
Strategy: Flip to long, against .8653, target TBD
Commentary: The large 5 wave advance from .6639-.7891 indicates that the larger trend is up but a larger correction is expected before a resumption of the uptrend. The decline from .7891 has yet to even reach the 38.2% level of the previous rally. As such, the decline from .7891-.7435 is most likely just wave A in a larger A-B-C decline. The current rally is wave B. Wave B could exceed .7891 in an expanded flat but we do expect price to eventually come under .7435 and test .7365 (10/22 low).
Strategy: Exit bear position