[B]• Euro Bearish Pattern Unfolding
• Japanese Yen Runs Into 21 Day SMA
• British Pound Decline About to Accelerate
• Swiss Franc 1.1100 Good Entry Point
• Canadian Dollar Pattern Unclear Near Term
• Australian Dollar Little Changed
• New Zealand .7800 Potential Resistance[/B]
Commentary: We are still looking for a larger decline. There are 2 counts that we are following closely; “the decline from 1.4967 has either completed the first leg of a flat correction (3 waves down to this point) or a more bearish structure is unfolding now and the decline from 1.4908 is wave 3 within a 5 wave bearish cycle from the top.” Both scenarios remain valid at this point but we favor the former corrective scenario. This treats the first 3 wave decline as wave A in a larger A-B-C correction. The more bearish count (in red) treats the decline from the top as a series of 1st and 2nd waves. Both counts are bearish and call for at least a return to 1.4520. The more bearish count would see price get to this level much quicker.
Strategy: Bearish against 1.4858, target 1.4520
Commentary: The USDJPY rally is likely coming to an end near term. There are now 5 waves higher from 107.20, indicating that the USDJPY has more upside potential, but not before a corrective decline that likely sees at least 109.46. A push to the 38.2% of 117.93-107.20 at 111.30 is still very much a possibility but at this point, downside risk outweighs upside potential. We will look to re-establish long positions on the expected decline.
Strategy: Exit bullish position
Commentary: The decline that we have anticipated may finally be underway. The favored count treats the decline from 2.1160-2.0522 as larger wave 1 (or A) in a bear cycle with the rally to 2.0844 as wave 2 of the same degree. The decline to 2.0353 was wave 1 of 3 and the choppy rally from 2.0353 to 2.0831 can be counted as a triple zigzag, which fits as wave 2 of 3. Wave 3 of larger 3 appears as though it is underway now and downside potential is much greater. Short term potential resistance is at 2.0740.
Strategy: Bearish, against 2.0831, target much lower
Commentary: We maintain that price is expected to challenge former congestion at 1.1300 in the next few weeks (if not sooner). “The rally from 1.0886 is a beautiful 5 wave advance. 5 Waves higher indicates that the trend of the next larger degree is up so we should expect at least one more 5 wave rally, but not before a corrective setback. We will use this correction to get bullish.” Support should be strong in the 1.1100 area.
Strategy: Flat
Commentary: We have been looking for a much larger setback but the wave structure at small degrees of trend indicates additional bullish potential. It is also possible that a triangle or some other corrective pattern is unfolding from .9992. A bearish outcome remains possible as long as price is below 1.0002. As mentioned though, the wave structure at smaller degrees of trend does not favor the downside. The bullish count is shown on the chart but the recent decline looks corrective (circled).
Strategy: Exit bearish position
Commentary: There is no change to the AUDUSD pattern. “The decline from .9399 could be just an a-b-c decline. This is suggestive of a resumption of the uptrend and eventual rally through .9399. The other count is bearish and suggests that an a-b-c flat correction is unfolding from .8753. In either case, price is expected to exceed .9068.” However, keep in mind the longer term pattern we showed last week. That pattern argues for a top of significant proportion to form in the next few weeks.
Strategy: Bullish, against .8653, target TBD
Commentary: The large 5 wave advance from .6639-.7891 indicates that the larger trend is up but a larger correction is expected before a resumption of the uptrend. The decline from .7891 has yet to even reach the 38.2% level of the previous rally. As such, the decline from .7891-.7435 is most likely just wave A in a larger A-B-C decline. The current rally is wave B. Wave B could exceed .7891 in an expanded flat but we do expect price to eventually come under .7435 and test .7365 (10/22 low). Near term, it looks like at least one more high is required before price turns lower in wave C. A spike through .7760 could test the 78.6% of .7891-.7435 at .7794 before price rolls over.
Strategy: Flat
