Euro In Small 5th Wave Down
Japanese Yen 5 Waves Up?Topping Potential Increases
British Pound Continues Slide
Swiss Franc Extending Weakness
Canadian Dollar Best Served By One More Low
Australian Dollar Digests Losses
New Zealand Dollar Sits Just Above Trendline
EURUSD The 5th wave of the 5 wave bearish sequence from 1.3367 is in progress and should take price below 1.2865. The 161.8% extension of 1.3367 1.3051 / 1.3296 is a bearish target at 1.2787. This potential support is reinforced by the 11/17 low at 1.2761 and the 200 day SMA at 1.2808. Another bearish target is the 61.8% extension of waves 1 through 3. This is at 1.2737. The minimum expectation is for price to dip to below 1.2865. Technically speaking, this would complete 5 down from 1.3367 and we would look for a 3 wave rally before the next leg down begins. On a very short term basis, 1.2948 should serve as resistance. A rally above there decreases confidence in the immediate bearish case.
USDJPY We still maintain our position regarding the longer term implications from the 13 month inverse head and shoulders pattern. A long term measured objective is at 128.67 which is where the advance from 108.96 would equal the advance from 101.67 to 121.38. We have a shorter term measured objective at 123.21, which is where the rally from 117.97 would equal the 114.42-119.67 rally. However, the rally above 121.78 makes it possible to count 5 waves up from 117.97 so the USDJPY may be close to a short term top. The first sign that a top is in place would be a daily close below former resistance (now support) at 121.78.
GBPUSD On January 23rd, we wrote be on the lookout for a reversal lower. 5 waves up from 1.7046 and 5 waves up in the larger 5th wave position from 1.8090 suggest that a major turn lower is upon us. On that very day, Cable topped at 1.9915. Weakness from 1.9915 is likely just the beginning of a much larger decline. Near term projected support is not until where the decline from 1.9736 equals the 1.9915-1.9645 decline. This is at 1.9461 (very close to the 1/9 high at 1.9455). A daily close below 1.9455 confirms the larger bearish outlook. In the short term, price below 1.9644 keeps the bear comfortable.
USDCHF The USDCHF rally to above 1.2546 confirms that the decline to 1.2375 on 1/23 was the bottom of a corrective wave 4. The next bullish target remains the 1.618 extension of 1.2271 1.1878 / 1.2110 at 1.2746. 1.2497 is initial support and price above there warrants an aggressive bullish stance. A dip below 1.2497 does not destroy the larger bullish structure but does merit a more cautious approach (technically?there are 5 waves up from 1.1878 but we think that this current 5th wave could extend to the mentioned measured objective of 1.2746). Only a decline below 1.2375 negates the bullish wave implications.
USDCAD The USDCAD continues to trade sideways at the top of its yearly range. The 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883. 1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927. The potential 2+ year bearish channel reinforces resistance at the current juncture. The topping scenario is best served by one more rally to above 1.1850 in order to complete 5 small waves from 1.1644. A decline below 1.1644 suggests that the decline has already started.
AUDUSD The AUDUSD is little changed following the break below the neckline of the head and shoulders pattern. The 1/10 low at .7759 is the breakdown point and now resistance. Focus is now on the 11/13 low at .7614. There is still the possibility that this decline from .7936 is the C wave of a an A-B-C correction from .7979. In this case, .7714 would be where the A and C waves would be equal. A daily close above .7759 would give the latter scenario more weight.
NZDUSD The 7 month trendline remains the pivot in Kiwi. That line is at .6913 today and increases 7 pips per day. Nothing has changed regarding the short term wave structure. The rally from .6840 to .7034 was most likely an a-b-c correction of the .7096-.6840 decline. We are looking for a decline to challenge .6778, which is where the decline from .7034 would equal the .7096-.6840 decline. This measured objective intersects with the 11/29 and 11/30 lows. Price below .7034 keeps this analysis intact.