New Zealand Dollar - Clear Short Term Bearish Opportunity

  • Euro at Critical Juncture
  • Japanese Yen Breakout is Real
  • British Pound Could Spike Higher Before Reversing
  • Swiss Franc 1.2372 is USDCHF Support
  • Canadian Dollar Remains in Corrective Mode
  • Australian Dollar .8447 is Bullish Pivot
  • New Zealand Dollar Irregular Flat Correction


[B]Commentary[/B]: The EURUSD is at an important juncture right now. The pair bounced off of the 100% extension of 1.3552-1.3392/1.3552 at 1.3264 and yesterday?s candle was a hammer. Since the decline from 1.3680-1.3392 is equal to the 1.3552-1.3261 decline, then there is the possibility that an A-B-C correction is complete at 1.3261 and that price is headed to new highs. However, the sentiment backdrop favors a much more significant top at 1.3680 as do other technical measures, such as the drop below the 100 day SMA and the break of the support line drawn off of the October 2006 and January 2007 lows. 1.3373 is short term resistance. As long as price remains below 1.3552, our bias is bearish but we are not taking action until we see a clear 3 wave setback.

[B]Strategy[/B]: None

[B]Commentary[/B]: The breakout yesterday above 122.17 looks like the real deal. It is our working assumption that the USDJPY is working higher in a C wave towards the 128.00 area over the next few months. The 78.6% of 135.13-101.67, the 100% extension of 108.98-122.17/115.14, and the 100% extension of 101.67-121.39/108.98 are between 127.97 and 128.70. In the short term, the USDJPY appears to be in a small 3rd wave within a 5 wave sequence that began at 120.75. 123.17 would be the 161.8% extension of wave 1 of this sequence and a corrective setback towards 122.50 is expected to unfold in a 4th wave before a 5th wave higher. We will look to align with the bullish breakout on a 3 wave correction following the completion of the 5 wave rally from 120.76. The short term chart is above.
[B]Strategy[/B]: None

[B]Commentary[/B]: The decline from 1.9964 is a clean 5 wave affair and an a-b-c correction is unfolding from 1.9621. This correction should be complete near 1.9833/35. 1.9835 is where wave c would equal wave a and 1.9833 is the 61.8% of 1.9964-1.9621. The rally from 1.9621 is a larger wave 2 and 2nd waves often retrace 61.8% to 78.6% of wave 1. Aggressive short term traders can look to trade the small c wave higher towards 1.9830. We are looking to get bearish on either, a break below 1.9621 or a rally to 1.9830.
[B]Strategy[/B]: Bearish on break of 1.9621 or a rally to 1.9830.

[B]Commentary[/B]: The daily close above the trendline drawn off of the October 2006 and January 2007 highs instills confidence in the bullish bias and a measured objective is at the 100% of 1.1993-1.2329/1.2145 at 1.2481. As mentioned Friday, this line is also the neckline from a 13 month head and shoulders pattern. From an EW perspective, the rally from 1.2145 is the 3rd of a 3rd wave rally, which often produce the most powerful moves. A rally through the mentioned 1.2481 level gives scope to an a confluence of Fibonacci targets at 1.2687/89 (100% of 1.1877-1.2571/1.1993 and 161.8% of 1.1993-1.2329/1.2145). These are targets that should be reached within 2 to 4 weeks. Near term, risk of a pullback is high as it looks like a clean 5 waves is close to complete. Support should be strong near 1.2372
[B]Strategy[/B]: Bullish now, against 1.2145, targeting 1.2500 and 1.2700 (add to position at 1.2372)

[B]Commentary[/B]: The 4th wave correction of the 1.1825-1.0548 decline is underway. The projected end for wave 4 is 1.0849-1.1036. 1.0849 seems more likely since that level intersects with channel resistance in 11 trading days. Corrections often unfold in a-b-c form, so we are treating the 1.0548-1.0711 rally as wave a in an a-b-c correction. Wave b may be underway now and could push into the 1.0583-1.0610 area. We are bullish now, against 1.0548, targeting 1.0800.

[B]Strategy[/B]: We are bullish now, against 1.0548, targeting 1.0800.

[B]Commentary[/B]: The AUDUSD remains in its corrective pattern, which is a larger 4th wave. The 3 wave structure may be complete at .8359, but with price so close to this level, it is possible that a dip below to the support zone bound by the 100% extension of wave a abd the 38.2% of .8162-.8476 at .8336/56 will occur before an impulsive rally takes place. Either way, risk is to the upside and a break above .8447 would confirm that higher prices lie ahead.
[B]Strategy[/B]: Flat now, getting bullish above .8447, against swing low (.8359 now), target TBD

[B]Commentary[/B]: The 5 wave decline from .7637 to .7465 suggests that at least one more leg lower will occur. An irregular flat correction may be unfolding from .7465. Potential reversal points are .7551 and .7571 (the 50% and 61.8% of .7637-.7465). We are bearish from .7535 and targeting .7262, which is the 161.8% extension of .7637-.7465/.7540. The 100% extension is at .7368 and may also be support so keep risk tight if price falls below .7400. In summary, we are looking for a spike above .7540 before price reverses and heads lower.
[B]Strategy[/B]: Bearish at .7535, against .7637, targeting .7262.

*[B]JTREND[/B] is a proprietary calculation that uses recent highs, lows and closes to determine the trend. JTRENDLT is the longer term trend and uses the last 4 weeks of price data. JTRENDST is the shorter term trend and uses the last 5 days of price data. An example is below. Blue bars denote bullish trend and red bars denote bearish trend. The chart below is the EURUSD weekly chart.