Japanese Yen Turns - Is This THE Turn?

[B]- Euro Ready to Tumble

  • Japanese Yen Turns Up From Support Line (USDJPY Rolls Over)
  • British Pound 1.9700 In Sight
  • Swiss Franc 1.2281 is Key
  • Canadian Dollar Nearing End of the 3rd Wave
  • Australian Dollar C Wave Down
  • New Zealand Dollar .7300 Gives Way[/B]

EURUSD - Yesterday?s commentary noted that “the consolidation since is a 4th wave and a drop under 1.3504 would complete 5 waves down from 1.3609. We will look for consolidation/bounce following a drop under 1.3609 in order to align with the downtrend.” The EURUSD dropped under 1.3504 and the consolidation that we were looking for occurred in 3 waves back to 1.3512. As long as price is below 1.3512, our working assumption is that either a 3rd wave or a C wave is headed lower. Measured objectives are at the 100% of 1.3680-1.3462/1.3609 at 1.3391 and the 161.8% extension at 1.3256.

USDJPY - The C wave down that we have been looking for in the USDJPY may be under way. The form of the decline on the way down will clue us in to the bearish potential. A break below the support line drawn off of the 4/19 and 5/11 lows (just above 120.00) may lead to increased selling pressure. A slight new high (above 121.38) is possible in order to complete a small degree 5th wave before a reversal. The chart today points to the fact that the entire rally from 115.14 is corrective, while the preceding decline was impulsive. Another impulsive decline should be underway now.

GBPUSD - Cable continues to break down as price is testing the 1.9700 figure. We mentioned yesterday that a" short term measured objective is at the 100% extension of 2.0131-1.9841/1.9997 at 1.9707 but we expect this decline to eventually challenge the 161.8% extension at 1.9528." Former daily lows from late March/early April are at 1.9545/89 (there is a trendline dating to June 2006 there as well). At this point, the pattern from 2.0131 appears to be playing out as a double zigzag (which is what we suspected was playing out earlier in the week) - which points to lower levels. Price has dropped under the 55 day SMA today (the 100 day is at 1.9660).

USDCHF - A diagonal may have kicked off the USDCHF rally but a potential double top at 1.2281 urges caution. The impulsive action from 1.2124 may be the beginning of a 3rd wave advance. Ultimately, we expect this rally to span weeks and target 1.2571. The pair closed above the 100 day SMA yesterday, which bolsters the bullish outlook. A pullback towards Fibonacci support (38.2% - 61.8% of 1.2124-1.2281 at 1.2221/1.2184) may be needed in order to correct the 5 wave rally from 1.2124-1.2281 before the next leg higher takes place.

USDCAD - We maintain that a 5th wave decline (5th of the 3rd) is close to a bottom and that a period of consolidation/pullback will occur in a 4th wave back to 1.1168. Daily momentum studies favor this view. The pullback should prove corrective and give way to a new low below 1.0927. Since the 2nd wave correction was sharp, expect the 4th wave correction to be a flat or triangle.

AUDUSD - We maintain that a C wave decline is underway towards the 100% extension of .8390-.8168/.8349 at .8127. Near term resistance is at the 5/17 high of .8268 (along with the 21 day SMA at .8279). .8127 would be where wave C would equal wave A (55 day SMA at .8149). The next support level is at .8028 (3/26 low).

NZDUSD - Kiwi is in the same position as the AUDUSD. That is, a C wave lower appears to be unfolding from .7403. We are bearish against .7403 and looking for a decline to where wave C would equal wave A at .7161. Potential short term support may come in from the 55 day SMA at .7219. Very near term, an extended 3rd wave may have ended at .7264 and .7310/14 should prove formidable (if the pair gets there).