USDCHF 1.2215 Critical for Bears

  • Euro Working Lower
  • Japanese Yen Could See 113.90 Soon
  • British Pound Multiple Bearish Counts
  • Swiss Franc Risk is 1.2215 (for USDCHF Short)
  • Canadian Dollar Inverse Head and Shoulders?
  • Australian Dollar Count Same as Yen
  • New Zealand Dollar .6869 Critical For Bulls


Commentary: There is little change from yesterday. We wrote yesterday that “it is possible that 5 waves higher are complete at 1.3719. A decline should unfold then correctively with potential for a bottom to form near 1.3497 (61.8% of 1.3360-1.3719).” This count appears to be on track, look for the decline towards 1.3497 to accelerate soon. " Another count has the entire rally from 1.3360 as larger wave B within a more complex correction from 1.3852. If this is a correct count, then wave C of the correction may be underway from 1.3719 and price is headed much lower, below 1.3360 and to the 1.3000 area. Either way, look lower near term. If the decline from 1.3719 unfolds in 5 waves (impulse), then the count that has the EURUSD headed below 1.3360 will be favored."

Strategy: Remain Bearish, against 1.3719, target 1.3510 and TBD

Commentary: “Bigger picture, the USDJPY has traced out 5 waves lower (which is large wave 1)from 124.13 to 111.59, indicating a large degree trend change. Since the low at 111.59, it is our contention that an A-B-C correction is unfolding as large wave 2. Within this A-B-C, wave C might be underway from 113.86, targeting 119.34 (61.8% of 124.13-111.59) to complete wave 2 from 111.59. The best opportunity will be to the downside for wave 3 lower so look for a top and reversal near 119.00/50”. Even shorter trerm, wave b of B could crop under 113.86 in order to test the 61.8% of 111.59-117.12 at 113.70 (or the 78.6% at 112.78) before wave c of B advances towards the 119.00 level. If this proposed count is correct, then the declice should accelerate soon and price needs to remain below 116.61 (preferably below 116.10).

Strategy: Flat (waiting for wave 3 bearish opportunity)

Commentary: The structure of Cable is similar to the EURUSD. 5 waves higher may have ended at 2.0233, so we are looking for a decline to at least the prior 4th wave at 1.9961. The 61.8% of 1.9651-2.0233 at 1.9874 is also a potential bottoming point. An alternate count is much more bearish and places Cable in a large wave C decline from 2.0233 within a larger complex correction from 2.0632. As is the case with the EURUSD, the structure of the decline will alert us to the proper count (if in 5 waves, then favor the more bearish count).

Strategy: Flat

Commentary: There is no change to the outlook that calls for a terminal thrust to come under 1.1815 while 1.2215 remains intact. “The daily chart shows a clear 5 wave rally from the December 2004 low to the November 2005 high. Everything since has been a correction. However, the correction is not complete. A complex correction has unfolded from the November 2005 high (W-X-Y). Wave X is a triangle, which means that we should expect a terminal thrust lower to complete the correction. The thrust to 1.1815 is most likely just the first leg of wave Y lower. As such, we are looking for price to come under 1.1815 before any meaningful bottom is in place.” Near term, price just tested the 61.8% of 1.2215-1.1993 (wave 1 of Y). 1.2135 may be the top of wave 2 of Y, so this is a high probability, high reward/risk bearish entry.
Strategy: Bearish now, against, 1.2215, target below 1.1815

Commentary: Near term USDCAD price action is choppy and corrective, which makes trading this pair on a short term basis risky right now. When price action is choppy, we prefer to sit tight and wait for a clearer pattern to emerge. The longer term charts (we are showing the weekly today) indicate that a significant bottom may be in place at 1.0340. A rally above 1.0676 most likely leads to a break above 1.0866. Short term, there is a possible head and shoulders continuation pattern, which is bearish. This pattern would suggest a retest of 1.0340 while 1.0676 remains intact.
Strategy: Bullish on a break above 1.0676, against 1.0340, target TBD

Commentary: The AUDUSD is correcting the .8870-.7673 decline and is in a similar position as the USDJPY. Price could come under .8051 to test the 61.8% of .7673-.8333 in a b wave before proceeding higher in wave c to complete the correction from .7673?.or a larger wave B wave bottom may already be in place and price could continue higher from above .8051 to complete the C wave. A rally through .8234 favors the latter scenario and a drop under .8051 favors the former.

Strategy: Flat

Commentary: Naturally, the Kiwi is in the exact same position as the AUDUSD. Since the NZDUSD already tested the 61.8% of .6639-.7272 at .6881, it seems more likely that a B wave low is already in place at .6869 and that price is headed higher in wave C to test .7500 before a reversal. .7501 is the 100% extension of .6639-.7272/.6869 and .7547 is the 61.8% retracement of .8082-.6639. If price fails to remain above .6868, then a test of the low at .6639 would be favored.

Strategy: Remain bullish, against .6869, target .7500
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.