The EURUSD has traded in a violent range this morning, as low as 1.5833 and as high as 1.5969. Still, the declines are corrective in nature. A diagonal pattern suggests that the EURUSD could spike through 1.60 before the larger reversal.
We have altered the count slightly but the implications are the same. That is, the EURUSD is nearing completion of a 5 wave rally at multiple degrees of trend and the next move is back to the 1.4967/1.4310 zone. The alternation is the treatment of the action from December 2007 to February 2008. We had previously concluded that the consolidation was a running triangle. It was improper to do so since even running triangles can not have wave D exceed wave B (rather, wave B exceeds the origin of A). What we end up with is a 4th wave as a zigzag and waves i and ii (running flat, which rare). Therefore, the rally from 1.5342 is wave v. Wave v (unfolding as a diagonal) would equal wave i at 1.5953. The high has exceeded this measurement by 30 pips. It is possible to count 5 waves in a diagonal from 1.5342 to 1.5983, so a top may be in place. Coming under 1.5510 would reinforce this view. On the other hand, it is just as correct to count 1.5712 as the bottom of wave iv of the diagonal. Under this interpretation, the end of wave v would be above 1.5983 but not above 1.6185. Without 5 waves down at any degree, the latter seems probable.
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The best count for the USDJPY from 95.72 is a double zigzag (a-b-c-X-a-b-c). With the second zigzag close to equal with the first zigzag, a bearish bias is warranted against 104.64. Those with a longer term horizon can keep risk above 107.20. The rally from 95.72 is a 4th wave within the 5 wave drop from 114.65 and the objective is below 95.72.
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STRATEGY: Bearish, against 104.64, target below 95.72
We are treating the drop from 2.0396 as a leading diagonal (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. Under this count, a bearish bias is warranted against 2.0025. However, be careful because COT data warns of a bearish sentiment extreme.
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It is very possible that a corrective advance is complete at 1.0283 and that the USDCHF is headed to fresh lows. This view is now favored as long as 1.0283 is intact because the decline from there is impulsive (on very short term charts). Short term resistance is in the 1.0150/1.0200 zone.
STRATEGY: Get bearish near 1.0150/1.02, against 1.0283, target below .9871
“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. Yesterday’s low was just above this level and may be the wave 2 low. A bullish bias is warranted against .9710 although price ideally remains above .9987.
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STRATEGY: Bullish, against .9710, target above 1.0324
With 5 waves up from .7781 and 3 waves down from .8024, it appears that the NZDUSD will at least exceed .8024 and test measured resistance at .8069 (at least). The short term structure is bullish as long as price is above .7850.
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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.
