From a technical point of view, the focus is on the GBPUSD this morning. The pair has held above yesterday's low at 1.9673 and mabe forming a triple bottoms of sorts that will lead to a break above 1.9850.
The level that we cited as potential support (1.5450/90) has held so far so we are sticking with the bullish bias. Ideally, we’ll be able to tighten up risk early next week. “We are not giving up on the bullish count until we see a clear 5 waves down from 1.5817. The decline, while sharp, could be a double zigzag. If this is a second wave, then it should come as no surprise that the decline is sharp (second waves are sharp so as to convince the majority of market participants that the trend is back down). Look for support in the 1.5450/1.5490 zone (61.8% of 1.5283/1.5818 and 100% ext. of 1.5818-1.5608/1.5664).”
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STRATEGY: Bullish, against 1.5283, target above 1.6018
Recent commentary has stated that “we are looking for a spike through 105.70 in order to complete the entire rally from 95.72. A push through 105.70 would be wave Z from 102.57 in what is a triple combination correction (W-X-Y-X-Z).” The spike through 105.70 yesterday satisfies minimum expectations for wave Z so it is possible that a top is in place at 105.86. A push through 105.86 would likely test resistance from a former congestion zone in the 106.00/65 zone.
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Support held just below 1.97 and a 4th wave should be complete at 1.9672. The corrective sequence took the form of a double flat (complex and labeled W-X-Y). Complex forms such as this are common in 4th waves. On very short term charts, the decline from 1.9803 is a textbook correction. Keep risk at 1.9671
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STRATEGY: Bullish, against 1.9671, target above 1.9850
We know this about the USDCHF; the decline from 1.0624 to 1.0214 is in 3 waves, which is corrective. However, the entire advance from .9647 is also in 3 waves (triangle as wave B). One possibility is that price action since 1.0624 is tracing out another triangle, but in larger degree (as an X wave). If this is the case, then a choppy decline back to 1.03 is the next move.
We should know very soon whether or not we are completely wrong in our assessment of the USDCAD. We’ve been bulls and waiting for a buying opportunity. We were given that opportunity as the USDCAD dropped into support from the 78.6% of .9710-1.0324 at .9841 last week; a 100 + pip move off of the low is nice but a push through .9997 would inspire confidence in the bullish count. The pair must remain above .9710 for us to remain bulls.
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STRATEGY: Bullish, against .9710, target above 1.0324
We proposed a bearish bias yesterday, noting that “the rally from .7536 is in 2 nearly equal legs, therefore it is possible that an important top will form soon and that Kiwi will retrace all of the rally from .7536. The decline from .7921 is not the clearest 5 wave drop but it can be counted as such. Therefore a bearish bias is warranted against .7921. Look for resistance near .7866.” However, the decline counts better as a double zigzag at this point, so we are standing aside from the bearish bias. We are proposing a bullish count today.
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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.
