The USDJPY tested a resisting trendline this morning that dates to December 2007. The failure at the line presents a low risk USDJPY short opportunity.
We are still of the camp that the rally from 1.5342 is wave B within an A-B-C correction from 1.5904. These are the reasons why. The previous bull leg was a 5th wave that broke from a 4th wave triangle and triangles lead to terminal thrusts. Wave B would equal 127% of wave A at 1.6055 and 138.2% of A at 1.6118. These are potential reversal points although a reversal could happen at any moment. We will have a special report on the EURUSD later today with monthly, weekly, daily and short term charts.
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We maintain that wave iv in the USDJPY could be complete at 102.95. We stress the qualifier ‘may’ because 4th waves usually end up a triangles or combinations, rather than zigzags. For example, the USDJPY could be in the early stages of a triangle. Even so, price would still come lower near term, probably below 98. In summary, remain bearish.
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STRATEGY: Bearish, against 102.93, target below 95.72
Our longer term bias remains bearish but the GBPUSD may continue to bounce over the next few days. The drop from 2.0396 may be a leading diagonal as wave 1 of C (within the A-B-C decline from 2.1160). Under this interpretation, the GBPUSD rally from 1.9599 is wave 2 within the 5 wave drop (wave C) from 2.0396. The Fibo reversal zone is 1.9904-2.0092.
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STRATEGY: Bearish, against 1.9892, target 1.86
This is the daily chart showing that there is a count that treats the decline from 1.3285 as a 5 wave decline. Under this count, the next big move is towards 1.10. The rally from .9647 to 1.0249 is best counted as a double zigzag (7 waves), which either completes a correction or is the first leg in a more complex correction. Given the action (nothing impulsive) since the 1.0249 top, we favor the latter. Look for support at .9838 (100% of 1.0249-.9871/1.0216) and .9776 (78.6% of .9647-1.0249). A rally through 1.0089 warrants a bullish bias.
The rally from .9710 to 1.0324 is in 5 waves, confirming that the larger trend is up. We are treating the decline from 1.0324 as a 3 wave correction (a-b-c). Wave c would equal wave a at .9967 and the 61.8% of .9710-1.0324 is at .9945. Today’s low is just above this level and may be the wave 2 low. A bullish bias is warranted against .9710.
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STRATEGY: Bullish, against .9710, target above 1.0324
Short term AUDUSD price action has been difficult to decipher recently. This in and of itself suggests that the AUDUSD is in a large correction. The structure of the down-up sequence since February, it is possible that a triangle is unfolding. Under this interpretation, the pair would decline into .91 or so over the next few weeks but in a choppy manner.
We showed the long term picture yesterday and suggested getting bearish on a break below .7781. However, the near term picture is bullish since there are 5 waves up from .7781 and 3 waves down from .8024. As such, a short term bullish bias is warranted against .7781. Our confidence in this count is low given the possible triangle in the AUDUSD and how pervasive bearish attitude towards the USD.
STRATEGY: Bullish, against .7781, target above .8024
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[1] STRATEGY is a summary of our best technical ideas. The ideas are subjective and are subject to change everyday although trades are typically held for at least a few days and sometimes a few weeks or more. Ideas are also included for crosses throughout the week; these are published at separate articles at DailyFX.