The bottom line is that EURUSD bearish sentiment is extreme. News headlines and stories are usually overly bullish at tops and bearish at bottoms. One such headline, " Euro May Fall for a Fifth Day Before Report on European Retail " makes a forecast in its headline. This is what I call the ‘media prognostication turn trade’.
There are a number of counts at the current juncture that are valid. One is that a triangle is complete as wave 4 within the 5 wave drop from 1.6039. Under this count, a new low is possible but a reversal should then occur. Another count (shown this morning) is that a diagonal triangle is underway from 1.4908. In this case, a rally should be underway in wave iv towards 1.47. Yet another (although viewed as less probable) count is that an expanded flat is underway and wave C will begin soon and end above 1.4908. Extreme bearish sentiment favors a turn.
It’s not pretty, but the USDJPY has made a series of lower highs and lower lows since the August top at 110.65. This, along with price below the 21 day SMA, is bearish. Favor the downside as long as price is below 110.28 (price ideally remains below 109.72).
The GBPUSD continues to slide, but it is clear that 5 waves are nearing completion from the July 15 top. A large correction, back to at least 1.88, is expected to begin soon. The pair is vulnerable to a new low but support should be strong at weekly and daily pivot supports near 1.7640/50.
The best USDCHF has a triangle complete at 1.0948 and the pair in a 5th wave that will lead to a top and reversal. We’ll look to identify the top when it is confirmed. At this point, only a drop below 1.0948 would suggest that a top is in place. Former long term support near 1.1250 should now act as resistance on the upside.
We are showing the daily chart because the USDCAD is nearing a potential turning point. The rally to 1.0747 satisfies minimum expectations but there is no sign of a top. A test of 1.0800/66 would present a chance to fade strength against former long term support at 1.0927.
As long as price is below .8692, there is potential for the AUDUSD to slide lower in wave 5. A pause in the decline may be underway in wave iv of 5.
There is still a chance that a flat is underway and that the NZDUSD will turn higher from near current price and complete its correction above .7215. However, it is just as likely that wave v of 3 is headed lower. .6739 is where wave v would equal wave i.
[B]Jamie Saettele writes [I]Forex Technicals: The Day Ahead[/I], Monday-Thursday (published at 6 pm EST), [I]Daily Technicals [/I] every weekday morning (9 am EST), [U]COT analysis[/U] (published Monday mornings), and analysis of currency crosses throughout the week. He is also the author of Sentiment in the Forex Market.[/B]
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[B]Contact at <[email protected]>[/B]