• Euro 5th Wave Extending
• Japanese Yen Reversing Today
• British Pound 2.1000 Very Close
• Swiss Franc Extending to 1.1350
• Canadian Dollar Turn Getting Closer
• Australian Dollar To Exceed .9271 Before Turn
• New Zealand Dollar Should Rally Through .7785
Commentary: Wave 5 within the 5 wave bull cycle from 1.3360 is underway. Wave 5 may have started at 1.4125 and here is why. An extremely rare pattern called a running flat may be wave 4. In a running flat, wave b exceeds the origin of wave a, but wave c does not even reach the terminus of wave a. This pattern occurs in markets that are so bullish that the correction does not even complete. This information, combined with the facts that 5th waves in currency markets tend to extend and that the sentiment indicators we follow are not extreme, favors continued gains in the EURUSD. Short term support is at 1.4374.
Strategy: Remain bullish, move risk to 1.4279 (from 1.4188), Target TBD.
Commentary: The USDJPY is playing out as expected. It is possible to count 5 waves down from 117.93 so a larger correction is unfolding. “Look for resistance at 115.56 (100% extension of 113.24-115.04/113.76…this is also close to the former 4th wave at 115.72) 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).” The USDJPY is close to its objective (115.50) so look for a top and reversal today.
Strategy: Get short close to 115.50, against 117.00, target below 111.59
Commentary: The short term structure in the GBPUSD has been unclear for some time. Given that the EURUSD remains bullish and that the GBPUSD remains within its weekly bullish channel, a bullish bias is warranted for a potential test of the resistance trendline near 2.1000/2.1100. The alternate count treats the entire rally from 1.9651 as a large B wave, but without a 5 wave decline visible there is no reason to fade this rally.
Strategy: Flat
Commentary: We wrong in the bullish stance yesterday as the USDCHF did make a new low (below 1.1564). With 5 waves down now from 1.1785, look for resistance in the 1.1671 area for an opportunity to get short against 1.1894. The 5th wave that we had thought ended at 1.1599 is extending and is in just its 3rd wave. Ultimately, price could extend as low as the 161.8% extension of 1.1894-1.1599/1.1785 at 1.1308.
Strategy: Taken out of bullish position…look to get bearish close to 1.1671, against 1.1894, target 1.1350
Commentary: “The sentiment indicators that we follow (COT in particular) argue for a bottom to form now (but this has been the case for a while). When a market is extending for some time, we use a trick to try to attempt to identify when a market is likely to turn. Extended impulses will end after either 9 waves, 13 waves, 17 waves, etc (these are all derivations of 5 waves……5 + 4, 5 + 4 + 4, 5 + 4 + 4 + 4). The current decline is likely wave 13, which should end with one more low (below .9511). Once a low is registered, a small 5 wave rally will serve as our alert to get bullish.” The USDCAD is getting very close to a bottom….a new low (below .9511) would satisfy minimum expectations for the decline. Weekly pivot support is at .9441.
Strategy: Flat
Commentary: Bigger picture, the rally from .7673 is in its 5th wave, indicating that an important top is about to form and that price should come back to at least .8750 (but the potential for a much more significant top is high). Within the 5th of the 5th (from .8750), it appears that one more high is required (above .9271) before a reversal will occur.
Strategy: Flat
Commentary: A rally is likely exceed .7738 soon and probably .7785 before a deeper correction unfolds. This would make 5 waves up from .6639…which completes large wave 1 in a new 5 wave bull cycle. A deep setback would then be expected to at least .7365 (likely lower) before wave 3 higher unfolds.
Strategy: Flat