• Euro Ending Diagonal on Daily Chart?
• Japanese Yen Remains In Correction
• British Pound Remains In Range
• Swiss Franc In C Wave
• Canadian Dollar Decline (USDCAD Rally) Looks Corrective
• Australian Dollar in 5 Wave
• New Zealand Dollar Longer Term Bearish Against .7785
Commentary: We wrote yesterday that “the EURUSD decline looks like a clear 5 wave affair, therefore we are treating 1.4349 as a significant top. The advance has unfolded in a corrective manner as well, probably a double zigzag.” However, the decline from 1.4279 has unfolded as a correction (zigzag). With the larger trend remaining up (as it has for some time), be sure to keep risk tight if dedicated to the bear side. On the other hand, a cautious bullish bias is warranted against 1.4188 for a break of 1.4349. A large ending diagonal might be unfolding in the 5th wave position within the 5 wave bull cycle from 1.3360.
Strategy: Flip to bullish, against 1.4188, for a break above 1.4349.
Commentary: There is no change to the USDJPY as we believe that a larger correction is unfolding from 113.24. It is possible to count 5 waves down from 117.93 so a larger correction is due unless the decline is extending. Look for resistance at 115.93 (100% extension of 113.24-115.04/114.13) and the 61.8% of 117.93-113.24 at 116.14. Once we see evidence of a top, we will be getting aggressively bearish (and we’ll let you know here). Very short term traders might try and trade this small c wave higher with risk at 114.13.
Strategy: Flat
Commentary: Cable has been treacherous lately. The pattern from an EW perspective is not clear in our mind, but the series of lower highs from 1.9651 indicates that the trend remains up. Still, the overlapping nature of the rally from that point (unless these rallies are a series of 1st and 2nd waves) does not inspire confidence in the bull trend. Be careful is short against the range high (2.0547) since consolidation can give way to a brutal move.
Strategy: Remain Bearish, against 2.0547, target TBD (below 2.0258) (LOW CONFIDENCE)
Commentary: We maintain that the drop below 1.1623 completed 5 waves down from 1.2468 and that a large rally is underway. Potential support is at the 61.8% of 1.1599-1.1785 at 1.1670 and the pair looks ready to test that level now in a c wave lower within an a-b-c correction from 1.1785. A rally through 1.1785 instills confidence in the larger bullish outlook.
Strategy: Bullish, against 1.1599, target TBD
Commentary: The rally from .9623 is a textbook correction (in 3 waves), and suggests that the USDCAD will continue to drop unless a more complex correction is unfolding (in which case the trend is still down, but just postponed). If a complex correction is unfolding, then potential resistance is at the 61.8% of .9825-.9623 at .9748.
Strategy: Flat
Commentary: Back to basics. We tried getting bearish yesterday and were proved wrong. Taking a look at a daily chart, it looks rather clear that the AUDUSD requires one more high (above .9077) before ‘topping’ potential’ comes to the forefront. Potential support for short term bullish entries are at .8907 and and .8864.
Strategy: Flat
Commentary: We maintain that the .7785-.7394 decline was an impulse. This means that at least one more leg lower will take place. The up, down, up scenario that has unfolded since .7394 looks like an a-b-c expanded flat correction. The correction may be complete at .7569 since exceeding .7556 satisfies minimum expectations. See our special report from Friday at NZDUSD Top.
Strategy: Get bearish now, against .7785, targets TBD