Yen at 5 Week High - Look for Extension

  • Euro to Challenge 1.3608
  • Japanese Yen Challenging 117.00
  • British Pound Towards 2.0000
  • Swiss Franc Little Changed
  • Canadian Dollar Consolidates
  • Australian Dollar End of Correction?
  • New Zealand Dollar Terminal Thrust Complete?

Commentary: We wrote yesterday that “the decline from 1.3838 is wave C in a larger A-B-C correction from 1.3852. Price is likely to continue lower towards the 100% of 1.3852-1.3608/1.3838 at 1.3595. The next bearish target is the 161.8% extension at 1.3445.” This count remains on track so we are sticking with it. Near term, the decline from 1.3825 is in 5 waves but a correction back to 1.3714 is possible before the next leg lower. Still, favor the downside.

Strategy: Remain Bearish against 1.3824, targets 1.3600 and 1.3450

Commentary: We wrote yesterday that “the USDJPY has reversed after the high made yesterday at 119.83. Price is likely to continue lower (below 117.18). This decline may be a 5th wave so be wary of being too aggressive on a break below 117.18.” The strength of the decline from 118.25 suggests that the USDJPY is in a 3rd wave from 118.25. If this is correct, then the pair should continue lower until 116.29 before any kind of sizeable bounce takes place. This view is favored as long as price is below 118.25

Strategy: Remain bearish, move risk to 118.25 (from 119.83) targets 116.25

Commentary: We wrote yesterday that “the best count has the decline from 2.0461 as large wave C in an A-B-C from 2.0654 (same as EURUSD). The rally to 2.0397 was likely small wave ii of larger wave C. The bearish targets that we focused on a few days ago are back in focus now (1.9989 and 1.9697).” We are sticking with this outlook as long as price is below 2.0397. Near term resistance is at 2.0242.
Strategy: Remain bearish, against 2.0397, targets 2.0000 and 1.9700

Commentary: No change to the USDCHF as the pair has not moved much. "The structure is bearish as long as price is below 1.2165. But rally from 1.1815 is in 5 waves, which sets the stage for additional gains. Additional strength towards the 61.8% of 1.2165-1.1815 at 1.2032 may be needed before the next leg down. Remember that we are looking for a decline towards the measured objective at 1.1364 (the 161.8% extension of 1.2468-1.1960/1.2165)."
Strategy: Remain Bearish against 1.2165, target 1.1400

Commentary: We maintain that the USDCAD is in a rally leg that will push through 1.0699 (likely next week). Target are 1.0821 (100% extension of 1.0340-1.0699/1.0462) and 1.1043 (161.8% extension). The rally from 1.0462 is either larger wave C or 3. This view is favored as long as price is above 1.0462.
Strategy: Remain Bullish, move risk to 1.0462 (from 1.0340), targets 1.0821 and 1.1043

Commentary: We wrote yesterday to “look for a decline below .8443 towards the 100% extension of .8870-.8458/.8661 at .8249.” The leg lower is under way right now. Near term, coming under .8398 may complete an initial 5 wave decline from .8661 and give way to a larger corrective setback. It is also possible that this completes the entire A-B-C correction from .8870 (which is a larger 4th wave). In this case, a significant low will be put in place. There is obviously no evidence of that yet but it is possible.
Strategy: Move to flat (from bearish)

Commentary: We wrote yesterday that “weakness this morning (as in yesterday) gives scope to the thrust lower from the triangle. Look for a decline below .7531 towards chart support at .7452 (6/13 low).” Kiwi traded to .7399 this morning and the decline from the triangle is in 5 waves, indicating that the entire bear wave from .8108 is complete. As with Aussie though, there is obviously no evidence that the pair put in a bottom so we are watching for developments.

Strategy: Flat
[B]*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. [/B]