[B][/B]
[B][/B]
[B][/B]
[B][/B]
[B]EURUSD [/B]
[B][/B]
[B]London[/B][B] Commentary: [/B][I]Potential remains for a push to the 1.3750 area and a reversal. We warned yesterday though that "the advance from 1.3360 has stalled near the 61.8% retracement from the top (1.3852) to 1.3360. A larger more complex correction may be playing out. In this instance, the rally from 1.3360 would end up as an a-b-c rally with the rally from 1.3450 unfolding as wave c. Due to the extent of the decline from 1.3684 (which makes it unlikely that it is a 4th wave correction), a bearish bias is warranted on a break below 1.3563. [/I]
[B]New York[/B][B] Update: [/B] Although suggestions are relatively bearish in the EURUSD, short term upside potential looms for the currency pair before a correction can occur. As a result, a confirmed break above the 1.3684 resistance ceiling is likely to open scope for a move higher to the 1.3726 July 30 high with definitive capping just below the 1.3690 resistance trendline. Comparative breaches lower through our benchmark at 1.3563 would purport a more bearish move.
[B]Strategy: [/B]Move to flat (from bullish), get bearish on a break below 1.3563
[B][/B]
[B]USDJPY [/B]
[B]London Commentary: [/B][I]We wrote yesterday that “it is possible that a top is in place at 117.12 as the decline from 116.74 could very well extend. With this in mind, a bearish bias is warranted against 116.25. If the decline does extend, then potential support is at the 8/22 low of 113.98.” The bottom last night was at 113.86 but we are viewing the rally since as a correction of the decline from 116.74. We are unsure of the internal wave count at this point but as long as price is below 115.72, the trend is towards lower prices and an eventual break of 111.59. [/I]
[I] [/I]
[B]New York[/B][B] Update: [/B]As the USDJPY approaches a key resistance level in the 116.75 resistance trendline, bullish momentum may be enough to push ahead of the barrier and open the possibility of test higher to the 117.00, a key reversal point noted previously. As a result, we remain bullish on the pair till that point, circa 117.12 should the pair formidable close above the 116.74 aforementioned level. Downside risk is seemingly limited to the 115.75 support figure.
[B]Strategy: [/B]Flat
[B]GBPUSD [/B]
[B][/B]
[B]London[/B][B] [/B][B]Commentary:[/B][I] Cable?s structure is unclear following the push above 2.0141 and therefore we will refrain from taking a strong stand either way this morning. “There are a few different valid wave counts at the current juncture but the one that we favor labels the entire decline from 2.0654 as large wave A. The rally since is large wave B (although the rally from 1.9651 could just be the first leg of wave B). Resistance should be strong near current levels, which is 2.0153 and 2.0271 (50%-61.8% of 2.0654-2.0153). The mentioned 161.8% is also at 2.0203 (middle of the fibo zone) and this is a previous congestion area.” [/I]
[B]New York[/B][B] Update: [/B]GBPUSD is additionally testing key resistance heading into afternoon trade. Already overextended, according to momentum indications, the pound sterling may be set for a test higher. However, a formidable close above the 2.0186 August 26th high would be needed prior to any further long initiations. As a result, we are now eyeing the 2.0200 psychological resistance as a potential top.
[B]Strategy: [/B]Bullish targets hit (flat)
[B][/B]
[B]USDCHF [/B]
[B][/B]
[B]London[/B][B] Commentary[/B]: [I]With price action remaining choppy on a short term basis, we are showing the daily chart today for perspective. [B]The daily chart shows a clear 5 wave rally from the December 2004 low to the November 2005 high. Everything since has been a correction. However, the correction is not complete. A complex correction has unfolded from the November 2005 high (W-X-Y). Wave X is a triangle, which means that we should expect a terminal thrust lower to complete the correction. The thrust to 1.1815 is most likely just the first leg of wave Y lower. As such, we are looking for price to come under 1.1815 before any meaningful bottom is in place. [/B][/I][B][/B]
[B]New York[/B][B] Update: [/B]Bid momentum is building in the USDCHF currency pair as indications are ticking higher from oversold barriers set in the New York session. At current print, we are set on the 1.1900 psychological support with a break above the 1.2007 intraday hourly high purporting another leg higher to channel resistance of 1.2020.
[B]Strategy: [/B]Bearish, move risk to 1.2046 (from 1.2215), targets 1.1562 and TBD
[B][/B]
[B]USDCAD [/B]
[B][/B]
[B]London[/B][B] [/B][B]Commentary:[/B] [I]After briefly trading above 1.0666, the USDCAD has come off again. One possibility is that the rally from 1.0470 completed an expanded flat correction from 1.0531. However, the longer term charts (we are showing the weekly today) indicate that a significant bottom may be in place at 1.0340. A rally above 1.0676 most likely leads to a break above 1.0866.[/I]
[B]New York[/B][B] Update:[/B] Finding support at the 1.0591 support trendline, the USDCAD currency pair looks set for an incremental bounce back higher to test the 1.0632 intraday hourly high. A formidable break above the level would purport another leg higher to the 1.0676 overnight high before any capping can be considered. A breach lower would comparatively purport our previously mentioned target at 1.0341.
[B]Strategy: [/B]Flat
[B][/B]
[B][/B]
[B]AUDUSD [/B]
[B][/B]
[B]London[/B][B] [/B][B]Commentary: [/B][I]We wrote yesterday that “this morning?s rally from .8206 to .8278 is clearly in 3 waves (to this point). A break below .8206 warrants bearish action.” The Aussie broke below .8206 and continued on for a test of .8050. With the rally from .7673 to .8333 in a clear 3 waves (which is a correction), the dominant trend is down.[/I]
[B]New York[/B][B] Update:[/B] Aussie bidders are set to take the currency higher on a break of the previous resistance target of 0.8206. With momentum indications backing the notion, we are set for initial targets at 0.8277 August 28th session high before making any assumptions up to the 0.8300 psychological resistance. Comparable downside is limited to the 0.8187 trendline.
[B]Strategy: [/B]Remain bearish, against .8333, targets .8072 and TBD
[B][/B]
[B]NZDUSD [/B]
[B][/B]
[B]London[/B][B] [/B][B]Commentary[/B]: [I]We wrote yesterday that “a small 5 waves down appears to have unfolded from .7272 to .7042 and a correction ended at .7149. Look lower.” Kiwi plummeted from .7149 to .6869 and the decline is an impulse. Similar to the Aussie, the rally from .6639 to .7272 is in 3 waves, indicating that the larger degree trend is down. [/I]
[B]New York[/B][B] Update: [/B]Similar momentum is looking strong for the NZDUSD. With momentum indications showing strong support, we are eyeing initial targets at the 0.7145 trendline resistance prior to any pullback notions.
[B][/B]
[B]Strategy[/B]: Bearish now, move risk to .7149 (from .7272), targets TBD
[B]Written by: Richard Lee, Currency Strategist[/B]