-Preparing for a EURUSD breakout
-GBPUSD suggests a short term USD rally before the break
-AUDUSD lagging NZDUSD
-USDJPY key level defined
-High reward/risk USDCAD trade
-USDCHF break could lead to a test of parity
-EURJPY and GBPJPY not especially clear
-EURGBP may accelerate higher
[B]EURO / US DOLLAR[/B]
[B]Classical Outlook:[/B] At present it is unclear whether we are in the process of carving out a medium-term lower top by the yearly highs at 1.4340 ahead of the next downside extension below 1.3750, or are in the process of putting in a fresh higher low above 1.2885 ahead of an eventual break back above 1.4340. A compelling case can be made on both sides and we anxiously await a break of either of these key levels for a clearer directional bias. In the interim, the 100-Week SMA has done a good job of capping gains. [B]Elliott Wave Outlook: [/B]A 4th wave triangle is complete at1.3877 and the next expected move is a terminal thrust (higher) above 1.4340 and maybe 1.4720. It is possible that a small second wave is complete at 1.4118 but not probable given patterns in other USD crosses (which suggest short term USD strength before the break). Potential support is at 1.4055 (21 day SMA is at 1.4060 as well).
[B]
BRITISH POUND / US DOLLAR[/B]
[B]Classical Outlook:[/B] After stalling by the 61.8% fib retrace off of the major 1.8670-1.3500 move, the market could be attempting to carve a medium-term top by 1.6745 ahead of a significant drop back towards the 1.5000 level at a minimum. Overbought weekly stochastics are confirming the need for a pullback, with the indicator on the verge of a negative/bearish cross. However, bears might want to wait for confirmation which will be given on a break back below critical support by 1.5800. Only back above 1.6745 ultimately negates. [B]Elliott Wave Outlook:[/B] A triangle appears to be in its latter stages in the GBPUSD. Triangles consist of 5 waves (a-b-c-d-e) and the rally from 1.5980 would be wave d of the triangle. Favor the downside to at least 1.6260 near term in order to complete the triangle. Such a drop would correlate with a short term decline in the EURUSD.
[B]
AUSTRALIAN DOLLAR / US DOLLAR[/B]
[B]Classical Outlook:[/B] Medium term technical studies are conflicting with the market stalling by the recent 2009 highs at 0.8265, while the current weekly candle shows good upside follow through from the previous bullish outside week. Still, we are inclined to hold to the bearish side for now, with price action still showing a potential top, and weekly stochs putting in a negative cross. Key levels to watch over the coming week come in by 0.8265 above and 0.7970 below. [B]Elliott Wave Outlook:[/B] Bigger picture, the AUDUSD is at risk of a significant decline as the structure of the rally from .6005 is corrective (3 waves). However, the larger decline is unlikely to begin until price exceeds .8269 in order to complete wave v of C. .8385 (61.8% of the decline from .9856) is potential resistance. Like the EURUSD and GBPUSD, a short term corrective decline would set the stage for the next bull leg.
[B]
NEW ZEALAND DOLLAR / US DOLLAR[/B]
[B]Classical Outlook:[/B] Much like some of the other major currencies, the antipodean is trying to decide whether it is in the process of putting in a shorter-term higher low by 0.6155 or a medium term lower top at 0.6630. And just like the other major currency pairings, we continue to hang onto a USD bullish bias and bearish bias for the pair. However, the multi-week choppy consolidation needs to be broken to the downside below 0.6155 to officially confirm outlook. A weekly close back above 0.6630 negates. [B]Elliott Wave Outlook:[/B] The NZDUSD has already exceeded its 2009 high of .6601. Expect additional strength over the next several weeks (at least) to complete the rally from below .50. .6950 (pivot high from September 2008) is potential resistance. Recent highs are divergent with intraday momentum, suggesting that the NZDUSD is at risk of a sell off near term.
[B]
US DOLLAR / JAPANESE YEN[/B]
[B]Classical Outlook:[/B] There is nothing bullish in the medium-term or longer-term for this pair with the market locked in an inter-day downtrend off of the 2009 highs by 101.45 and in a much more defined longer-term down-trend since 2007. We look for a fresh lower top now by 101.45 to be confirmed on an eventual break back below 87.15 over the coming weeks. Any rallies above 95.00 should therefore be used as good sell opportunities. Also look for a break back under 91.75 in the coming week to accelerate declines. [B]Elliott Wave Outlook:[/B] The decline from 101.50 is a series of 1st and 2nd waves. The USDJPY is resisted by the 200 day SMA as well as a line extended from the June 15, July 1, and July 2 highs. Bears are favored against 97.01 in anticipation of the long term decline resuming. Exceeding 97.01 would signal that the USDJPY remains confined to a correction.
[B]
US DOLLAR / CANADIAN DOLLAR[/B]
[B]Classical Outlook: [/B]Despite the latest pullback, we still hold a constructive outlook for the pair and look for a low to carve out at current levels by the 1.0785, 2009 lows ahead of renewed strength back above 1.1725 over the coming weeks. Daily studies are now oversold, while medium-term studies show the market very well supported below 1.1000. It is too early to call for a major double bottom, but a base at current levels and break back above 1.0785 would indeed confirm. [B]Elliott Wave Outlook:[/B] The rally from 1.0782 unfolded as an impulse and the 5 wave decline from 1.1730 may be wave C of an expanded flat. The pair has nearly retraced the entire rally from 1.0782 but until that happens, a bullish outcome is possible. Even if the larger trend is down, then the USDCAD should correct a portion of the decline from 1.1730 since the drop from there is in 5 waves and lows are not confirmed by momentum (divergence).
[B]
US DOLLAR / SWISS FRANC[/B]
[B]Classical Outlook:[/B] The market has mounted a slow and steady recovery since posting historic lows below parity in 2008, but is under pressure over the past several weeks with the latest consolidation underway just over 1.0500. But for the recovery structure to remain intact, the market needs to hold above the December 2008 1.0410 lows. A 2009 low was recently made by 1.0590 and we look for the latest consolidation to hold above this level ahead of a fresh upside break beyond 1.1025 which offers itself as medium-term resistance. [B]Elliott Wave Outlook:[/B] Sticking with the USD bearish count, expectations over the next several weeks are for a thrust lower that ends below 1.0367. Near term resistance is at 1.0820. An eventual target is 1.0037, which is the 100% extension of the decline from 1.2303 to 1.0367 (from 1.1973).
[B]
EURO / JAPANESE YEN[/B]
[B]Classical Outlook:[/B] No clear bias here as the market continues to chop around. A break back above 140.00 or below 127.00 is now required for clearer directional bias. Above 140.00 suggests major base in place, while back below 127.00 opens the door for bearish continuation. [B]Elliott Wave Outlook:[/B] Lack of clarity is the best way to describe the USDJPY. Ideally, the rally from the January low in the EURJPY completes wave C of an expanded flat that began at the October 2008 low. The implications are bearish but this count doesn’t make sense with the EURUSD bullish scenario (unless that is wrong, which is possible of course). Staying beneath 136.93 keeps the bearish count on track but confidence is low.
[B]
BRITISH POUND / JAPANESE YEN[/B]
[B]Elliott Wave Outlook:[/B] The GBPJPY is in a similar position. After plummeting below 147.00 earlier in the month, the GBPJPY has rallied and rests just below its secondary top of 160.34. If indeed a corrective advance from the January low is complete, then 160.34 needs to remain intact.
[B]
EURO / BRITISH POUND[/B]
[B]Classical Outlook:[/B] Weekly studies still show plenty of room to run and we look for additional setbacks towards the 0.8200 area. Look for the current recovery rally to be well capped by former support in the 0.8750-0.8800 area ahead of the next major drop below 0.8400. [B]Elliott Wave Outlook: [/B]The EURGBP appears to have completed a correction from the December 2008 top. The structure of the decline since then is not especially clear, which is the first sign that the pair in question is stuck in some sort of correction. If the interpretation of the wave count above is correct, then the EURGBP should retrace most of its decline.
[B]
TRADE LIST[/B]
*Entry prices for trades that are recommended ‘at market’ are listed as the close price on the date published.