The USD should continue to weaken as the EURUSD is in the most bullish part of its pattern since 1.4438. Objectives for the EURUSD rally are not until about 1.5200. Additionally, the short term USDJPY pattern suggests that 110 is likely in the next few weeks.
Expectations are for a bullish breakout that completes wave 5 within the 5 wave advance from 1.3261. Simply exceeding 1.4967 would satisfy the minimum expectations.
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We wrote Friday that “the short term supporting trendline will remain intact if the rally from 1.4438 is the 5th wave that we think it is. An objective is at 1.5126 (161.8% extension).” To recap, the rally from 1.4438 is a 5th wave (within the 5 wave rally from 1.3261). Wave 3 of 5 is underway from 1.4614 and wave iii of 3 may be underway from 1.4778. With this in mind, move risk to 1.4778. Again, objectives are above 1.50.
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STRATEGY: Bullish, against 1.4778, target 1.5119
Longer term, we maintain that a 12 year triangle ended at 124.13 in June 2007 and that the USDJPY is headed lower for a test of its 1995 low at 81.12. Since 124.13, the USDJPY has traced out a series of 1st and 2nd waves. The decline should accelerate in the next month or so in wave 3 of 3. This forecast remains intact as long as price is below 114.65. Resistance should be strong near 110.00 (Fibo and congestion).
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We wrote Friday that “price could be putting in an important bottom just below 107.00. Price is supported by a trendline drawn off of the 1/23 and 2/4 lows. The decline from 108.35 consists of 2 equal legs as well (a common trait for a correction).” We expect the rally to continue and for the USDJPY to test the 110 area in the next few weeks. Potential support is at 107.60.
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STRATEGY: Bullish, against 106.73, target TBD
</p> For the first time in months, the GBPUSD daily count is clear. The pair has declined in 5 waves from 2.1160, indicating that a significant top is in place. The 5 wave decline is viewed as either wave 1 in a 5 wave bear cycle or wave A in a 3 wave bear cycle. In other words, longer term bearish potential is great. The rally underway now is either wave 2 or B and we will look for a top in the 2.0033-2.0463 zone.
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We maintain that the rally from 1.9361 is wave C within the A-B-C advance from 1.9337. Price is expected to exceed 1.9957 (wave A high) in the next few weeks before a larger wave 2 (or B) top is put in place. Near term, wave ii of C may be complete at 1.9615.
STRATEGY: Bullish, against 1.9641, target above 1.9957
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A corrective 4th wave rally may be underway now within the 5 wave decline from the October 2006 high at 1.2768. The USDCHF will likely trade in a choppy manner for the next month or so, but with an upside bias before a decline in a 5th wave completes the entire decline from the October 2006 high and gives way to a multi-year low.
It is possible to count 5 wave up from 1.0728 to 1.1103. An a-b-c decline to 1.0885 could be the first wave in a complex correction (W-X-Y). Wave X then is underway now and is taking the form of a triangle. A thrust lower (below 1.0885) would complete wave Y and larger wave B, which would set the stage for a C wave rally into 1.12/13. That C wave rally may in its early stages now. Support should be strong near 1.0800/26 (Fibo levels) if price does slip lower.
STRATEGY: Bullish, against 1.0728, target TBD (above 1.1103)
The pattern in the USDCAD since the November low at .9055 is either an A-B-C rally that will lead to a new low (under .9055) or a 1-2 (expanded flat) base that will lead to a strong rally to new highs (suggesting that a multi-year USDCAD low is in place). Either way, price will come below .9755. Potential support from Fibonacci is at .9652 and .9511.
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The USDCAD resembles that of either a C or 3rd wave. The minimum expectation is below .9755 and objectives are at .9691 and .9378. Potential resistance is in the 1.0006/33 zone. Risk can be moved to 1.0165.
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STRATEGY: Bearish, against 1.0378, target below .9755
The AUDUSD is in its final stages of an A-B-C rally that began in 2001. Minimum expectations are for a new high (above .9400) but objectives are near 1.000.
It could be that a 5 wave rally from .8874 is complete. This would be wave 1 within a 5 wave advance that ultimately tests parity. As long as price is above .9166, then the AUDUSD could subdivide higher. If given the chance, we will look to get long near .9111.
[B]We wrote last week that “the NZDUSD trend remains up and an upside breakout will probably lead to a test of the July 2007 high at .8108.” That breakout and test have occurred and a near term objective is at .8364. A bigger reversal is possible (shown on the chart today…expanded flat with wave 5 top in 2005 and B wave top soon) but we would like to see evidence of a reversal on short term charts first.[/B]
[B]After rallying for 8 straight days, the NZDUSD is due for a correction. The high today at .8151 is the highest this pair has been since January 1982. While the pattern over the last month is not especially clear, look for support near the 50% of .7902-.8151 at .8027. The 61.8% at .7997 may also provide support.[/B]
[B]STRATEGY: Look to get bullish near .7997/.8026, against .7902, target TBD [/B]
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Tell us what you think about this report: contact the strategist about the article at <[email protected]>[/B]
[B] [1] STRATEGY is a quick summary of our best technical ideas. The ideas are subjective and are subject to change everyday although trades are typically held for at least a few days and sometimes a few weeks or more. Ideas are also included for crosses throughtout the week; these are published at separate articles at DailyFX.
[2] TREND ANALYSIS is based on a rolling pivot model. LONG TERM TREND is determined by the last 3 months of price data (high, low, close). SHORT TERM TREND is determined by the last 4 weeks of price data (high, low, close). R3, R2, R1, PL, PH, S1, S2, and S3 are provided to aid in identifying entries and exits. These are objective measures and our subjective analysis (STRATEGY) may differ.
[3] SENTIMENT ANALYSIS takes into account COT reports and analysis of news headlines. Studies done by Jamie Saettele (to be published in an upcoming book) indicate that the greatest number of headlines and the most negative headlines about a currency appear at bottoms and that the greatest number of headlines and the most positive headlines about a currency appear at tops.
[4] ELLIOTT WAVE VIEW is our assessment of both the longer term (DAILY BARS) and shorter term (60 MINUTE BARS) EW structure. This is the basis for our STRATEGY.
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