USDJPY Correction Unfolding Back to 119.50

  • Euro Still Bullish Above 1.3608
  • Japanese Yen Correcting In Wave 4
  • British Pound Headed to 2.0400
  • Swiss Franc Wedge
  • Canadian Dollar Retraces In Wave 2
  • Australian Dollar Flat Correction
  • New Zealand Dollar Flat Correction

Commentary: The EURUSD has declined but 1.3608 remains intact and the dominant pattern remains the 3 wave corrective decline from 1.3852-1.3608. The decline from 1.3727 has stopped in the vicinity of the 61.8% of 1.3608-1.3727 (1.3654). A break above 1.3727 exposes the 100% of 1.3608-1.3727/1.3637 at 1.3755. If 1.3608 gives way, then the bullish structure is no longer intact.

Strategy: Remain bullish, against 1.3608, targets 1.3755 and 1.3850

Commentary: We cited 117.60 yesterday and the USDJPY declined to this level this morning in what was likely the completion of a 5th wave (v). We are expecting larger wave 4 to bring price back close to 119.50 (7/31 high). In summary, we are execting the USDJPY to gain correctively until 119.50 before another leg lower brings price under 117.60. A break under 117.59 exposes 115.14.

Strategy: Move to flat (previously bearish)?look to get bearish close to 119.50

Commentary: The near term pattern in Cable has cleared up and we think it likely that price action from the 7/29 low at 2.0181 is part of wave B in a large A-B-C correction from 2.0654. The B wave could play out as a triangle or a flat. If a flat, then price is likely to test 2.0399/2.0418 in the next day or two (flat scenario is shown on the chart today). This is the 100% extension of 2.0181-2.0378 / 2.0203 / 50% of 2.0654-2.0181. Coming under 2.0181 negates this scenario and exposes 2.0056.
Strategy: Flip to bullish (previously bearish from 2.0327) against 2.0181, target 2.0400

Commentary: As has been the case, we do not have a good read on the USDCHF. The pair has traded in a diabolical whipsaw fashion for much of the summer. The long term inverse head and shoulders (bullish) pattern that we have mentioned remains intact as long as price is above 1.1877. The decline from 1.2165 could be a diagonal (wedge) in the B position in a large A-B-C correction from 1.1960. This would suggest that wave C will exceed 1.2165 before the next leg lower occurs. This scenario is shown on the chart.
Strategy: Flat

Commentary: We wrote yesterday that “we are looking for a corrective setback in the USDCAD to unfold. The rally from 1.0340 is clearly impulsive, signaling that the trend has changed from down to up.” Wave c of the a-b-c correction from 1.0699 is unfolding now and should bottom in the 1.0477-1.0562 zone. This is the 61.8% to 38.2% of 1.0340-1.0699.
Strategy: Bullish now, against 1.0340, target TBD

Commentary: Bigger picture, the decline from .8870 is the beginning of larger wave 4 within the 5 wave rally from .7268. Over the next several weeks, the AUDUSD could decline to the former 4th wave at .8162. Wave A of the decline ended at .8458 and wave B is underway now. Wave B is unfolding as a flat. The last leg of the flat is unfolding now and could extend to above .8615 before wave C of the correction brings price much lower. The limit for wave B of this correction is .8399 (138.2% of .8458-.8614). A drop under there suggests that something more bearish is unfolding.
Strategy: Flat

Commentary: NZDUSD is in the exact same position as the AUDUSD. A larger B wave or (2nd wave) is unfolding from .7553, which we expect to exceed .7731 before wave C (or 3rd wave) brings price much lower. The 38.2% of .8108-.7553 at .7765 is an objective for the end of the rally from .7531.

Strategy: Flat
*JTREND is a proprietary calculation that uses recent highs, lows and closes to determine the trend. JTRENDLT is the longer term trend and uses the last 4 weeks of price data. JTRENDST is the shorter term trend and uses the last 5 days of price data. An example is below. Blue bars denote bullish trend and red bars denote bearish trend. The chart below is the EURUSD weekly chart.