[B]• Euro Towards 1.4800 Before Correction Continues
• Japanese Yen at Important Juncture
• British Pound 2.0500 Should Provide Resistance
• Swiss Franc Remains Bullish
• Canadian Dollar Supported By Trendline and 61.8
• Australian Dollar Tests 20 day SMA
• New Zealand Dollar Could Go Either Way[/B]
Commentary: We wrote Friday that “a cautious bearish bias is warranted against 1.4770 but a larger correction is likely playing out in the form of a flat or triangle. This suggests that a test of 1.4800 (61.8% of 1.4966-1.4526) is possible (if not probable) before bearish potential comes to the forefront.” This outlook remains intact. The decline from 1.4966-1.4525 was most likely the first wave of a a 3 wave correction (or a triangle). Look for resistance near 1.4800/70.
Strategy: Flat
Commentary: The USDJPY has run into chart resistance from the former 4th wave extreme at 111.76. We maintain that wave C of the A-B-C rally from 107.20 is underway towards 113.50/114.00. The rally from 109.66 is not especially clear although it it probably wave i of C. As such, expect a deep wave ii retracement that brings price back to at least 110.63 before a strong rally in wave iii of C.
Strategy: Flat
Commentary: We still favor a drop to the long term channel support that we focused on last week. Also, a measured objective is at 2.0024 (100% extension of 2.1160-2.0353/2.0831). The rally from 2.0180 is fast approaching potential resistance from the 1.8% of 2.0678-2.0180 at 2.0488 and the 11/23 low at 2.0518. Look for a top and reversal in this vicinity.
Strategy: Get bearish near 2.0500, against 2.0678, target below 2.0180
Commentary: There is no change to the outlook that calls for a drop below 1.0886 in order to complete wave 3 within a 5 wave bear cycle from 1.2468. “With price stalling near the 4th wave (iv) of one less degree, probability is high that the USDCHF is beginning a wave v decline to complete larger wave 3.”
Strategy: Bearish, against 1.1353, target 1.0886
Commentary: There is little change to the USDCAD. The resisting trendline and 61.8% Fibonacci level the last few days on the daily chart has turned us bearish. The pair will not even have retraced 38.2% of its rally from .9055 until .9772. Potential support prior to that level is a line at .9940. In sunmmary, remain bearish.
Strategy: Bearish move risk to 1.0149 (from 1.0216), target 1 at .9790
Commentary: We have stuck to our guns regarding the bullish count and patience might be paying off here. “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: Bullish, against .8653, target .9140
Commentary: We would still like to see a larger corrective setback in the Kiwi before committing ot he bull side but we have presented an alternate (immediately bullish) count in red letters. 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 with the current advance as wave B. However, a rally through .7891 would force us to switch our count to the alternate (in red) bullish count.
Strategy: Flat