Daily Technical Briefing
EURUSD Support Below 1.4100 Presents Bullish Opportunity
Technical Overview
- Euro a-b-c Correction Done at 1.4015?
- Japanese Yen to Likely To Trade In a Choppy Manner
- British Pound Correction Complete at 2.0256
- Swiss Franc Wave 4 Done at 1.1894
- Canadian Dollar Tests Extreme
- Australian Dollar Remains Short Term Bearish
- New Zealand Still Expected to Come Under .7500
EUR/USD
Commentary: Ok, the EURUSD count has finally cleared up (we think) and we feel comfortable stating a directional bias for the first time in weeks. We can confidently say that the decline from 1.4281 is a correction (a-b-c) because the advance from 1.4015 is impulsive (5 waves). What should prove to be wave 1 in a new bull cycle from 1.4015 is nearing an end and price is likely to fall, albeit correctively in wave 2, towards 1.4070/1.4090 before the next leg up.
Strategy: Look to establish bull position near 1.4070/90, against 1.4015, target above 1.4281
USD/JPY
Commentary: We still expect a rally to at least 118.00 (maybe 119.00) prior to a reversal. Recent weakness is viewed as a consolidation/correction in a 4th wave, which is either complete at 116.80 or will not end until 116.27 (latter view favored). A drop under 116.80 satisifies minimum expectations for wave iv and a rally above 117.61 would complete wave v and therefore larger wave 3 of C. Yet another setback should then occur in larger wave 4 before wave 5 completes the entire rally from 111.59. In summary, we expect the USDJPY to trade with a bullish bias from little if any under 116.27. A top and reversal is then expected. Objectives for the end of the advance are 118.12 and 119.34. It is reasonable to assume that this topping process will take at least a week, if not 2.
Strategy: Flat
GBP/USD
Commentary: Near term (this week), it looks like Cable is likely to exceed 2.0494 but we maintain that everything from 2.0654 is part of a larger correction such as a triangle or a flat. A potential reversal point is where the advance from 1.9879 would equal the 1.9651-2.0366 advance, at 2.0593. That would compete what we are treating as wave B within the large correction. Very short term traders may wish to trade from the bull side against 2.0256. Support is at 2.0360/80 and the objective is the mentioned 2.0593.
Strategy: Look to establish bull position near 2.0360/80, against 2.0256, target 2.0593
USD/CHF
Commentary: We favor a new low (beneath 1.1623) in order to complete the terminal thrust from the longer term triangle. As such, the rally from 1.1623-1.1894 is viewed as wave 4 within the 5 wave decline from 1.2468. Coming under 1.1623 satisfies minimum expectations but we will be better able to determine bearish objectives as the decline unfolds. The bearish case is strong as long as price is below 1.1960 on a daily closing basis.
Strategy: Flat
USD/CAD
Commentary: Much like the USDJPY is undergoing a topping process in the next few weeks, the USDCAD is undergoing a bottoming process. Wait for price chop lower in a series of 4th and 5th waves before thinking about fading this bear trend. A rally back to 1.0095 would possibly complete wave 4 in the 5 wave bearish cycle from 1.0866. A subsequent decline would still be expected to register a new low though in wave 5. Things could change but at this point, upside potential looks limited to about 1.0100 and there is no point of reference from which to place a stop (for longs).
Strategy: Flat
AUD/USD
Commentary: We wrote yesterday that "near term resistance is at the 61.8% of .9032-.8917 at .8988. A rally to there would complete either wave 2 or b and lead to a larger decline." This scenario may still be playing out as the Aussie has rallied to .9011 and stalled. .9032 is critical to the very short term bearish bias. If short, keep risk tight if price drops below .8912 (that could signal the end of an a-b-c correction from .9032).
Strategy: Remain bearish, against .9032, target TBD
NZD/USD
Commentary: There is no change to the Kiwi (the pattern is not as clear as the AUDUSD pattern). "With 5 waves already up from .6824, the decline from .7668 could be wave a of a larger correction, likely a flat. b waves in flats often test the origin of wave a and it is not uncommon for the b wave to exceed the origin of a." With price remaining below .7672, it is our contention that price is rolling over in wave c that should come under .7501.
Strategy: Flat
