Japanese Yen 117.90 is a Potential Reversal Point

  • Euro 1.3600 is Next
  • Japanese Yen Nears Reversal Point
  • British Pound 2.0153/2.0271 Reversal Zone
  • Swiss Franc 1.1993 Pivot
  • Canadian Dollar to Test 1.0340
  • Australian Dollar Surges Higher
  • New Zealand Dollar Multiple Possibilities

Commentary: The bullish EURUSD scenario is playing out as expected. We wrote yesterday that “we see potential for a third of a third wave to unfold towards the 161.8% extension of 1.3370-1.3546/1.3450 at 1.3734. Keep risk tight though once price reaches 1.3626, which is the 100% extension. A top and reversal there would indicate that a larger bearish cycle is likely underway from the top at 1.3852 (the alternate count is shown in black).” Near term support is at 1.3534.

Strategy: Remain bullish, against 1.3450, targets 1.3620 and 1.3730 (move to breakeven after 1.3620 is hit)

Commentary: We wrote yesterday that “5 waves down from 124.13 appear complete so we expect this rally from 111.59 to unfold in a corrective manner and challenge the mentioned Fibonacci reversal zone (117.86 or 119.34). Former support at 117.20 may now be resistance.” The USDJPY tested 117.00 this morning. Viewing the very short term chart (15 min) in order to see the structure of wave c (from 113.98), it looks like one more high will be registered (above 117.12) before a top and reversal. 117.89 is a likely reversal point. This is the confluence of the 50% of 124.13-111.59 / 100% extension of 111.59-115.50/1113.98.

Strategy: Look for a top and reversal near 117.90

Commentary: The bullish bias has proved correct and the first target has been hit (2.0020). We wrote yesterday to “be careful if the 100% extension of 1.9651-1.9935/1.9743 at 2.0027 is reached as a top and reversal is possible there. A more bullish outcome has price testing the 161.8% at 2.0203.” Given the ease with which Cable took out 2.0020, it is likely that we?ll see a test of 2.0203 (161.8% extension). There are a few different valid wave counts at the current juncture but the one that we favor labels the entire decline from 2.0654 as large wave A. The rally since is large wave B (although the rally from 1.9651 could just be the first leg of wave B). Resistance should be strong between 2.0153 and 2.0271 (50%-61.8% of 2.0654-2.0153). The mentioned 161.8% is also at 2.0203 (middle of the fibo zone) and this is a previous congestion area.
Strategy: Remain bullish, move risk to 1.9930 (from 1.9743), target 1 hit at 2.0020, target 2 is at 2.0200

Commentary: See out special report on the USDCHF from yesterday at USDCHF Bear. Near term, it looks like a top may be in place at 1.2111, so the 1.2130 short entry in the special report most likely will not be hit. Rallies have unfolded in 3 waves at varying degrees of trend, indicating to us that the larger trend is down. A break below 1.1993 instills confidence in the bearish case and gives scope to a test of the 8/6 low at 1.1815. The first bearish target is the 161.8% extension of 1.2215-1.1993/1.2111 at 1.1753.
Strategy: Bearish now, add to position on break of 1.1993, risk at 1.2215, move risk to 1.2111 on a break of 1.1993, targets 1.1760 and TBD

Commentary: We wrote yesterday that “a top may be in place at 1.0666, although a more complex correction could unfold towards the mentioned 1.0738. Still, a cautious bearish bias is warranted against 1.0666. Look for a test of 1.0340 if 1.0531 gives way.” 1.0666 was the top and the USDCAD has come under 1.0530. The 100% extension of 1.0866-1.0530/1.0666 is at 1.0331, close to the 7/24 low of 1.0340. This is an intial bearish target. The bearish case is strong as long as price is below 1.0666.
Strategy: Remain Bearish against 1.0666, target 1.0340

Commentary: We has been looking for a top and reversal near the 38.2% of .8662-.7675 but the Aussie has surged higher. The AUDUSD looks similar to cable in that the decline from the top (.8870) is in 3 waves. This leaves open several possibilities but we favor labeling the decline from .8870-.7675 as wave A. The rally from .7675 is wave B (or just the first leg of wave B). Strength may continue until the 100% extension of .7675-.8092/.7955 at .8374. The 61.8% of .8870-.7675 at .8413 defends this level as well. Near term support is at .8120. We do not feel confident enough in the pattern to take action.
Strategy: Flat

Commentary: The same can be said for the NZDUSD as the pair has surged higher. There are a few valid waves counts at the current juncture but look for a test of the 100% extension of .6639-.7026/.6886 at .7273 before reversal potential. A former 4th wave/congestion area (.7201) may also prove formidable as resistance. We do not feel confident enough in the pattern to take action.

Strategy: Flat

***JTREND is a proprietary calculation that uses recent highs, lows and closes to determine the trend. JTREND uses the last 4 weeks of price data (highs, lows, closes). An example is below. Blue bars denote bullish trend and red bars denote bearish trend. The chart below is the EURUSD weekly chart.