NZDUSD Reverses Ahead of .7900 - Immense Bearish Implications

  • Euro Bull Run Not Over Yet
  • Japanese Yen Channel is Strong Resistance (USDJPY Support)
  • British Pound Ending Diagonal Complete?
  • Swiss Franc Towards Fibo Before Advance (USDCHF Decline) Continues
  • Canadian Dollar 1.0470 is Key
  • Australian Dollar Remains Bullish
  • New Zealand Dollar Significant Top in Place?

[B]Commentary[/B]: Wave 3 of the 5 wave rally that began at 1.3261 is complete at 1.3659 and wave 4 is underway now. We are expecting wave 4 to end somewhere near 1.3528/49, which is the former 4th wave and the 38.2% of 1.3371-1.3659 (wave 3). Wave 5 is expected to exceed 1.3680 before a longer term reversal takes hold. The structure is bullish as long as price is above 1.3637.

[B]Strategy[/B]: Get bullish close to 1.3530, against 1.3437, target 1.3680

[B]Commentary[/B]: With channel support holding and the dominant pattern being the 3 wave decline from 124.13 to 122.09, we are looking higher. A rally through 123.55 instills confidence in the bullish outlook. A break above 124.13 exposes the next level of chart resistance from the December 2002 high at 125.73. A confluence of Fibonacci measurements suggests that strength may persist until the 128.00 figure. The 78.6% of 135.13-101.67 is at 127.97. The 100% extension of 101.67-121.39/108.98 is at 128.70 and the 100% extension of 108.98-122.17/115.14 is at 128.33. Three long term Fibonacci measurements in close proximity to one another is rare. When this does happen, the level in question tends to act as a magnet. Limit risk to the 7/2 low at 122.6309 as positioning is extreme (specs extremely short JPY and commercials long JPY), which indicates the high probability of a reversal in the weeks ahead.
[B]Strategy[/B]: Bullish now, against 122.09, target 125.60

[B]Commentary[/B]: We are looking for a major reversal in the GBPUSD. The upper resistance line for an ending diagonal from 1.8515 is at 2.0333 today. Cable may push closer to this level but the reward to risk does not justify a bullish position. The daily shows why we are expecting a change in trend. The rally from 1.7046 is nearly complete (or already is) as indicated by the 5 wave structure. The 5th wave is an ending diagonal. These patterns often lead to a violent reversal and are usually fully retraced. Once we see a clear ‘5 down on the intraday (which would signal that a top is in), we will comment on it here.
[B]Strategy[/B]: Flat

[B]Commentary[/B]: The 5 wave decline from 1.2476-1.2091 sports an extended 5th wave (from 1.2341). We are treating the rally from 1.2091 as a correction, which means that we expect new lows either today or next week. Fibonacci resistance is at 1.2238 (38.2% of 1.2476-1.2091), 1.2284 (50%) and 1.2329 (61.8%). Look for a reversal of recent strength near one of these levels.
[B]Strategy[/B]: Flat

[B]Commentary[/B]: The reversal with long term bullish implications is underway as there are 5 waves up from the 1.0470 low. We are showing the short term structure this morning. A complex correction (W-X-Y) appears to be playing out, meaning that 1.0526 will be broken before the next leg up. 1.0470 must remain intact for the structure to remain bullish.

[B]Strategy[/B]: Bullish, against 1.0470, target TBD

[B]Commentary[/B]: The short term pattern is not clear so we are focusing on the longer term chart right now. The impulse rally that followed the break of the triangle began in June 2006. Impulse rallies will either unfold in 5, 9, or 13 waves (these are all derivations of 5 waves - 9 would indicate an extended wave - 13 would indicate 2 extended waves, etc). So far, there are just 7 waves. This means that we are looking for a corrective down leg to be followed by a rall to a new high. When the down leg will begin is anyone?s guess. The best opportunity in the AUDUSD in the next few weeks will be to wait for the corrective decline to unfold before getting bullish for a run at a new high.
[B]Strategy[/B]: Flat

[B]Commentary[/B]: The short term structure in Kiwi is also unclear. Kiwi is at an interesting point. The pair may be in the early stages of a significant reversal. The decline from .7463-.5928 was most likely an A wave and the rally since has been wave B. Within wave B, the rally from .6719 is nearly equal to the .5928-.7096 rally and .7878 is the 127% of .7463-.5928. The high yesterday was at .7879. This is a common relationship in a flat (wave B is usually retraces between 100%-138.2% of wave A). If our count is correct then wave C is underway and the decline should accelerate in the next few weeks.

[B]Strategy[/B]: Bearish now, against .7879, target TBD