[B]• Euro Correcting In Small Wave 4
• Japanese Yen Objective at 107.07
• British Pound Could Start a 3rd Wave Lower
• Swiss Franc Same as Euro
• Canadian Dollar Double Zigzag
• Australian Dollar Bear Break Opportunity
• New Zealand Triangle as Wave B[/B]
Commentary: We have maintained a bullish stance as the EURUSD is completing a 5th wave rally; BUT the rally may be nearing an end. We wrote yesterday that we favored labeling wave 4 as a triangle (alternation was one reason we favored this count). Bullish objectives are at 1.4912 and 1.4955. The pair has traded to 1.4856 today. One possibility is that wave iii of 5 ended at 1.4853 and that a flat correction is unfolding now in wave iv of 5. This correction should come under 1.4812 at minimum and likely come closer to the 4th wave of one less degree at 1.4770 (38.2% of iii is at 1.4764). In summary, the EURUSD is likely to drop below 1.4800 before wave iv challenges the mentioned objectives (1.4912/55).
Strategy: Exit Bullish position
Commentary: We were wrong in our preffered count that wave 4 was still in progress towards 112.00+. The USDJPY has broken down and traded below 109.00 this morning. As long as price is below 110.58, the favored count places the pair in wave iii of 5. There are objectives concentrated in the 108.00-108.50 range, which is fairly close. JPY pairs though have a tendency to extend in 5th waves so lower levels (and quickly) are a very real possibility. In fact, within the 5 wave bear cycle from 124.13, wave 5 would equal wave 1 at 107.07.
Strategy:Flat (Bearish bias warranted below 110.58).
Commentary: With the EURUSD potentially in for a period of weakness, we are focusing on the bearish count today. Under the bearish count, the decline from 2.1160-2.0522 is wave 1 in a 5 wave bear cycle. The rally from 2.0522-2.0844 is wave 2. The decline from 2.0844-2.0504 is wave i of 3 and the up (to 2.0617)m down (to 2.0353), up sequence is an expanded flat in wave ii of 3. If this count is correct, then price should remain capped near the confluence of the 61.8% of 2.0844-2.0504 / 11/14 reaction high at 2.0714/32. Wave iii of 3 would be next so under this count the decline will accelerate soon.
Strategy: Bearish now, against 2.0844, target TBD (much lower)
Commentary: The USDCHF is in a 5th wave (like the EURUSD) but is likely bouncing now in wave iv of 5. A potential end to the bounce from 1.1024 is 1.1115 (38.2% of 1.1261-1.1024). This level intersects with the reaction high from yesterday at 1.1112. Within the 5 wave bearish cycle from 1.1894, wave 5 would equal wave 1 at 1.1004 (psychological round number as well). We noted yesterday that the pair is at long term support also, with the 1995 low at 1.1172 and the 2004 low at 1.1286.
Strategy: Flat
Commentary: It is clear that a triangle is unfolding in the USDCAD, but where does that fit in the larger pattern? Triangles occur as either 4th waves or B waves and the structure does not favor this as a 4th wave. However, if a big double zigzag is unfolding from the 11/7 low of .9055, then this triangle fits nicely as wave B of the second zigzag. As such, wave C of the zigzag should be underway soon and take price close to where the second zigzag (from .9510) equals the first zigzag (.9055-.9724). This objective is at 1.0179.
Strategy: Bullush now, against .9703, target 1.0150
Commentary: See yesterday’s commentary for the description of the complex correction that may be unfolding. However, near term price action gives scope to a much more bearish development. With the rally from .8758-.8951 clearly in 3 waves, we must consider the possibility that the action from .9068 is in a series of 1st and 2nd waves. A break below .8758 would signal that a 3rd wave lower is most likely underway.
Strategy: Sell break of .8758, against .8951, target TBD
Commentary: The Kiwi has been stuck in a range and based on the pattern that might be developing, this could remain the case. A triangle may be unfolding as wave B within a large A-B-C decline from .7891. Under a triangle interpretation, price is likely to fall a bit more towards .7500 before a bounce in wave E of the triangle; then the thrust lower in larger wave C. A bearish stance is warranted against .7675.
Strategy: Bearish now, against .7675, target TBD
