- Euro Wave 4 Correction Possibly Complete
- Japanese Yen Breaking Towards 118.00
- British Pound Possibly Plummets Below 2.0000
- Swiss Franc 3 Wave Movement Favors USDCHF Downside
- Canadian Dollar Chops Higher (USDCAD Lower)
- Australian Dollar Reverses at 61.8%
- New Zealand Dollar Very Bullish
SEE A DECRIPTION AT THE BOTTOM OF THIS REPORT FOR JTRENDW AND JTRENDD
Commentary: We have been looking for the completion of the wave 4 correction to from 1.3928 before wave 5 results in an assault on 1.4000 and beyond. Considering that the 23.6% of wave 3 (1.3551-1.3928) is at 1.3839, it is possible that the correction is complete at 1.3828. For this reason, a bullish bias is warranted against 1.3719 (top of wave 1) for a test of 1.4000. As wave 5 unfolds, we will be able to better gauge where it might end.
Strategy: Bullish now, against 1.3719, target TBD
Commentary: A USDJPY rally should accelerate soon and the scenario that we described last week should play out. From the last week; The 5 wave rally from 112.59 shifts focus to the upside. The count that we are presenting today is one that we have been following for quite some time. It has a flat ended at 112.59 as wave b of 2 in an a-b-c correction from 111.59. Wave c is now underway towards the 100% extension of 111.59-117.12/112.59 at 118.12 (this is also close to the 50% of 124.13-111.59 at 117.86). A rally to 118.12 would complete larger wave 2 within the 5 wave bearish sequence from 124.13 and give way to the next leg lower.
Strategy: Bullish now, against 112.59, target 118.00
Commentary: On Friday, we wrote that the structure looks bearish as the GBPUSD could be entering a 3rd of a 3rd wave down. If this is the case, then well see much lower levels relatively soon (a break of 2.0043). This very aggressive bearish count is intact as long as price is below 2.0224. Cable plummeted to 1.9879 last night before finding some support. The count that we favor treats the rally from 1.9879 as wave 4 in a 5 wave bear cycle from 2.0366. Resistance is at 2.0010/27 (38.2% of 2.0025-1.9878 and former 4th wave).
Strategy: Flat
Commentary: It is unclear whether a top is in place at 1.1922. The rally from 1.1801 is in 3 waves (corrective) and indicates that the larger trend remains down. However, that rally may be just the first leg of a more complex correction. As long as price is below, a cautious bearish bias is warranted against 1.1922, targeting a drop under 1.1801. A rally through 1.1922 exposes 1.1968 (100% ext. of 1.1801-1.1922/1.1847).
Strategy: Flat
Commentary: We wrote on Friday that with no evidence of a bottom, we must remain bearish. However, at this point we urge caution with regards to pressing the short side. The nearly 3 year support line (will be 3 years in November) is being tested on the weekly and weekly RSI exhibits bullish divergence at this point. Additionally, the drop below 1.0340 may have completed a 5th wave decline at a large degree of trend.
Strategy: Flat
Commentary: After testing .8450, the AUDUSD decline from .8459 to .8274 looks impulsive (5 waves) and the rally corrective (3 waves). This alone indicates that we should favor the downside. Supporting the bear argument is the fact that the rally from .7673 stalled and reversed near the 61.8% of .8770-.7673 (.8413). The rally from .7673 is in 3 waves. A bearish stance is warranted against .8459 but the Kiwi structure looks very bullish, so be careful with the Aussie.
Strategy: Flip to bearish now, against .8459, target TBD
Commentary: The Kiwi structure is unfolding as expected. That is, the rally from .6824 is impulsive (5 waves), indicating additional upside potential. We wrote last week that near term, expect a drop below .7064 to complete a the correction from .7185 before the next advance. That correction is likely complete at .7005 and we expect the rally to accelerate in the next few hours in a 3rd wave.
Strategy: Remain bullish, against .6824, target above .7272
JTRENDW uses 13 week RSI in order to gauge strength of trend. The trend is considered Bullish if the indicator registers a reading above 60. The trend is considered Bearish if the indicator registers a reading below 40. If the reading is between 40 and 60, then the reading is Flat. The JTRENDD uses 13 days of data. An example of JTRENDW is below for the EURUSD.