USDJPY Head and Shoulder Break - Objective at 119.45

  • Euro Two High Probability Counts
  • Japanese Yen Double Zigzag
  • British Pound Breaks 2.0600
  • Swiss Franc Correction Possible Complete
  • Canadian Dollar 1.0400 Holds
  • Australian Dollar Up 12 Consecutive Days
  • New Zealand Dollar Breaks .8100

[B]Commentary[/B]: The EURUSD remains below 1.3843 (yesterday?s high) before pulling back to the 1.3800 figure. The two near term moves that we view as having the highest probabilities are, 1.) that an ending diagonal is unfolding from 1.3752 and 2.) that a flat is unfolding from 1.3752. In the first instance, the EURUSD will spike through the 1.3843 before reversing and trading to at least 1.3752. In the second instance, the pair will continue lower from current levels and initial support is just below 1.3752. We are showing the flat scenario on the chart.

[B]Strategy[/B]: Flat

[B]Commentary[/B]: We wrote yesterday that “intraday charts show a head and shoulders pattern forming from the beginning of June as well. The pattern is confirmed on a break below 120.75. The next level of support would be the 50% fibo of 115.14-124.13 at 119.64.” The USDJPY broke below the neckline and is currently testing the line as resistance. From an EW standpoint, a double zigzag may be unfolding from 124.13. The first a-b-c decline (wave W) is from 124.13-120.97. Wave X is from 120.97-122.60 and wave Y is underway now (will either be an a-b-c or i-ii-iii-iv-v). Waves W and Y would be equal at 119.45, very close to the mentioned 50% fibo at 116.64 and 1 pip away from the 5/11 low at 119.46. We are looking for a decline to this level.

[B]Strategy[/B]: Flat

[B]Commentary[/B]: The rally from 2.0056 is in its 5th wave and as such, we are looking for a return to the former 4th wave at 2.0459 once this 5th wave is complete. Of course, there is no evidence that wave 5 is complete yet. The pair continues to press against the resistance line drawn off of the June and July highs and RSI on the daily has been overbought since July 10. A drop below the line drawn off of the 7/6 and 7/13 lows would strongly suggest that a near term top is in place. That line is at 2.0576 today and in red on the chart above. Price above this line keeps the structure bullish.
[B]Strategy[/B]: Sell break of 7/6-7/13 line - currently at 2.0576 (in red on chart), against swing high (currently 2.0654), target 1 2.0459

[B]Commentary[/B]: We wrote yesterday that “a push through 1.2064 would satisfy minimum expectations so be wary of getting long on a break through that level.” After a spike to 1.2079 yesterday, the USDCHF appears headed for a test of 1.1960. A break of 1.1960 exposes 1.1877.
[B]Strategy[/B]: Bearish now, against 1.2079, target TBD

[B]Commentary[/B]: There is no sign that the USDCAD has turned higher but 1.0400 has remained intact since 7/18 and the pair may be forming a base. A push above 1.0611 woud strongly indicate that a significant low is in place at 1.0400 as that would break the series of lower highs.
[B]Strategy[/B]: Remain bullish, against 1.0400, target TBD

[B]Commentary[/B]: The AUDUSD has closed up 12 consecutive days (today would be the 13th), but the rally from .8707 is choppy (possible a diagonal), which warns that upside momentum is waning. .8840 has been a measured objective and the high this morning is at .8862. Risk of a reversal is high.
[B]Strategy[/B]: Flat

[B]Commentary[/B]: We wrote yesterday that “the 161.8% extension of .7237-.7637/.7452 is at .8099 and is also potential resistance. Althought Kiwi has extended, the form remains the same and we are looking for a 4th wave (within the 5 wave rally from .7237) to eventually unfold before a 5th wave makes a new high. The structure remains bullish.” This morning?s high at .8107 is just above the mentioned .8099. Still, the form still suggests that any decline will be corrective and that Kiwi is headed higher. .8247, the 161.8% of .7714-.7940/.7882 is a new target. The structure is bullish above .7940.

[B]Strategy[/B]: 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.