One more thrust higher, and the USD will complete 5 waves higher and form could be a significant top in the process.
We’ve talked about the 4th wave triangle scenario is recent days and the drop below 1.4815 confirms that the triangle pattern. The drop from this morning’s spike high at 1.4949 is wave 5 within the 5 wave bear cycle from 1.6039. Objectives are 100% of wave 1 (1.6039-1.5521) and 61.8% of wave 1; the math results in 1.4431 and 1.4673. 1.4675 seems more likely given that this is the center of the November-February consolidation. 1.4668 is the 38.2% of 1.2482-1.6018. Look for a significant low near 1.4650/75.
We still favor a deeper decline from 110.40 (as long as price is below there), into the Fibo zone of 106.30-107.86. As such the advance from 108.36 is probably wave B in a correction from 110.40.
The GBPUSD has fallen now for 10 straight days (which has happened twice since the 1970s…the other time was in 1989 during a long term downtrend…more on this tomorrow) We wrote yesterday that “a temporary low may be in place at 1.8639. If so, then expectations are for a corrective advance to at least the 1.8920-1.9034 zone.” Cable rallied but only 1.8786 and in a corrective manner. Wave 5 is considered underway from 1.8786 (as long as price is below there). Doing the same math that we did with the EURUSD, the GPBUSD objectives for the end of wave 5 are at 1.8532 and 1.8375. A significant low could form near one of these levels.
The USCHF continues to work higher as the pair presses against the top side of a channel line. The EURUSD and GBPUSD patterns are quite clear short term. Both of those counts call for additional USD gains before a major low (USD top) forms. As such, it is wise to expect the same from the USDCHF. 1.1050 is potential resistance.
We got the drop into 1.0550 that we had expected (1.0562 to be exact) but the USDCAD is probably headed to a new high in a 5th wave now. Longer term objectives are at 1.08. Look for a top and reversal near there.
The 4th wave that was expected appears to be complete at .8795. Expect a new low, below .8591, before a more significant low forms. The psychological .85 level is potential support.
We’ve altered the short term count slightly to better reflect the other USD pairs. As long as price is below .7057, our preferred count is that a 5th wave is underway that will come under .6824. The March 2007 and August 2007 lows at .6719 and .6639 are potential support as is weekly S2 at .6768.
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