-EURUSD resistance zone 1.38-1.39
-GBPUSD breaks above trendline
-AUDUSD possible head and shoulders continuation
-NZDUSD Fibonacci resistance
-USDJPY long term decline may have resumed
[B]EURO / US DOLLAR[/B]
[B]Classical Outlook:[/B] Has shown impressive upside this week following the previous weekly bullish reversal, and the market is now officially in the process of a material correction within the broader downtrend. While daily studies have now reached overbought, the weekly studies show more room to run, and we look for additional upside into the 1.3850-1.4000 area early next week before considering bear trend resumption. [B]Elliott Wave Outlook: [/B]The bulk of the advance from 1.2475 is complete. The sharp rally is most likely a second wave a 5 wave decline from 1.4723. Expectations over the next several weeks are for a top to form in the 1.38-1.40 zone. The first target at 1.33 was hit and the stop is trailed to 1.34 on the rest of the position.
[B]
BRITISH POUND / US DOLLAR[/B]
[B]Classical Outlook:[/B] Although the pair has now broken back above the 50-Day, rallies above the SMA have proved to be fleeting. The overall structure is still grossly bearish and a break back above the 1.4990 medium-term lower top from February 9 would ultimately be required to shift the structure. Daily studies however still show room to run with the next key resistance coming in by the 100-Day SMA at 1.4660. [B]Elliott Wave Outlook:[/B] I wrote last week that “trading above 1.4309 would trigger a bullish bull bias against 1.3650 and set the stage for a rally in wave c to above 1.50.” The bias was triggered so the strategy is to buy dips. A short term Fibonacci level at 1.4130 is a level to buy against 1.3840.
[B]
AUSTRALIAN DOLLAR / US DOLLAR[/B]
[B]Classical Outlook:[/B] The strong multi-day up-move from 0.6310 is now starting to show signs of fading, and with daily studies overbought, the market could be contemplating a resumption of the broader downtrend. Gains have extended to 0.6945, but have had a hard time establishing above the 61.8% fib retrace off of the 0.7275-0.6250 move. Look for pullbacks into the early week with an acceleration on a break back below 0.6725. [B]Elliott Wave Outlook:[/B] The AUDUSD may continue to strengthen in what is wave Y of a complex correction from .6005 that will end above .7272. However, price action since October has carved out a potential head and shoulders continuation pattern (bearish). The first target was hit at .6850 and the stop is trailed to .6720 on the remaining position. Only a drop below .6561 would begin to suggest that a top is in place.
[B]
NEW ZEALAND DOLLAR / US DOLLAR[/B]
[B]Classical Outlook:[/B] The current upside moves are still classed as corrective, and with the broader USD sell-off now looking stretched, we are compelled to look for opportunities to sell back into the downtrend. The daily RSI is now above the critical 70 level and stochastics are well above 80 at 94. The market is also testing the 61.8% fib retrace off of the 18Dec-4Mar move and we feel any gains beyond this point will be hard to come by. [B]Elliott Wave Outlook:[/B] Last week: “trading through the Elliott channel indicates a reversal. RSI divergence strongly suggests the drop from .5454 was a 5th wave. A recovery to at least .5454 is favored.” The NZDUSD soared higher, hitting both targets. Price is testing the 61.8% of the decline from .6090; a potential topping area in what may be a small second wave rally from .4890.
[B]
US DOLLAR / JAPANESE YEN[/B]
[B]Classical Outlook:[/B] The market has now reached its measured move objective off of the h&s top by 99.70, and after slightly exceeding the previous 2009 high/major double bottom neckline by 94.60 to 93.55, should finally find some support. There is a confluence of support by Thursday’s low in the form of the previous double bottom neckline, the 50% fib retrace off of the 87.15-99.70 move and the 50/100-Day SMAs. [B]Elliott Wave Outlook:[/B] The rally from 87.09 is in 3 waves (corrective), so it is possible that the long term decline has resumed. Staying below 99 keeps the bearish bias intact. Price is expected to eventually drop to a new low (below 87).
[B]
US DOLLAR / CANADIAN DOLLAR[/B]
[B]Classical Outlook: [/B]Despite the recent decline, the overall structure remains quite constructive with the current pullback still classed as corrective. Setbacks have broken down through the 61.8% fib retrace off of the 2009 low-highs and the 100-Day SMA at 1.2370, but are now struggling to establish below these levels. We are now looking for a medium-term higher low by current levels, ahead of the next upside extension beyond 1.3065. [B]Elliott Wave Outlook:[/B] The drop below 1.2350 negated the previously held bullish bias. However, the triangle since October is intact as long as price is above 1.1755. There is an alternate interpretation though that places a wave 5 high in place at 1.3068. Confidence in direction is low.
[B]
US DOLLAR / SWISS FRANC[/B]
[B]Classical Outlook:[/B] The latest pullbacks below 1.1315 have signaled an end to the multi day range and opened the door to the current drop to 1.1165. However, the pair should find some decent support from here in the form of the 50% fib retrace off of 1.0370-1.1970 (1.1170) and the 200-Day SMA (1.1200). Look for a rebound from current sub-1.1500 levels back into the familiar range into the week ahead. Below 1.1165 negates. [B]Elliott Wave Outlook:[/B] I wrote last week that “it is still possible that a diagonal is complete and that the spike above 1.19 was wave B of a flat from 1.1891. If this interpretation is correct, then price will drop below 1.1430 from current levels.” The pattern played out and a low is expected to form over the next several weeks. Watch for support at 1.0925 (Fibonacci).
[B]
EURO / JAPANESE YEN[/B]
[B]Classical Outlook:[/B] The cross looks like it is in the process of attempting to carve out a major double bottom. The market has now failed to establish below the 115.00 handle in late 2008 and then again in early 2009 and is now just shy of critical neckline resistance which comes in at 131.05. An eventual break above 131.05 would ultimately project gains back towards the 145.00 area over the longer-term. Below 125.55 negates. [B]Elliott Wave Outlook:[/B] The EURJPY pattern is far from clear. Wave C of a flat could be working higher to end above 131. It is also possible that the rally from 112.04 is a small second wave that will top before 131.
[B]
EURO / BRITISH POUND[/B]
[B]Classical Outlook:[/B] The market has shown good upside follow through over the past two weeks with gains extending to 0.9495 ahead of the latest minor pullbacks. Ultimately, any upside is still classed as corrective with a medium-term lower top now sought out below 0.9520, ahead of the next downside extension below 0.8635. Above 0.9520 negates and exposes a 0.9805 retest. [B]Elliott Wave Outlook:[/B] There is no change to the long held outlook that the EURGBP will eventually exceed .98 and reach parity. The initial target has been reached and the stop has been trailed to .9140. A drop below there would not alter the longer term bullish outlook but would expose the 3/2 high at .9016.
[B]
EURO / CANADIAN DOLLAR[/B]
[B]Classical Outlook:[/B] The broader structure remains constructive with the cross putting in yet another strong weekly higher high and higher low, just shy of 1.7000. Next key topside resistance comes in by 1.7110 (78.6% of 1.7515-1.5645) which guards against the critical 1.7515 multi-year highs, and we expect this level to be tested in the coming week. Only back below 1.6380 gives reason for concern and delays bullish outlook. [B]Elliott Wave Outlook: [/B]From last week: “Decline from 1.7522 is in 3 waves and that high should be exceeded.” There is no change to the outlook. Staying above 1.6320 keeps the bull strong.
[B]
TRADE LIST[/B]
*Entry prices for trades that are recommended ‘at market’ are listed as the close price on the date published.