ELLIOTT WAVE VIEW
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Recent commentary has focused on the ideas that “it looks as if the EURUSD could explode higher any moment now, given that the rally from 1.4438 may be a series of 1st and 2nd waves -- a common pattern that occurs before a big move.” As long as the market continues to prove us correct, there is little reason to exit -- especially if it looks as if a third wave is underway. Risk can be moved to 1.4531.
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STRATEGY: Bullish, against 1.4531, target mid 1.50s
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We have focused on a 61.8% Fibonacci is at 108.50 as a possible reversal point but have also mentioned that “due to the EW structure on the daily, COT data suggests that a more pronounced rally is possible if not probable.” An alternate count is in red and suggests that the USDJPY will exceed 110.11 before bearish potential. One reason that we think a bigger rally is underway is that the structure from 104.97 looks far from complete -- as do the rallies in the Yen crosses. Keep risk at 106.99 and potential support is in the 107.30/50 zone. It is possible that a significant top is in place at 108.59. However, there is no trade from the short side until we see 5 waves down from this level followed by a 3 wave rally.
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STRATEGY: Bullish, against 106.99, target TBD
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We maintain that “the count from 1.9386 is impulsive but far from complete. The next level of potential resistance is at 1.9787.” The GBPUSD has come into former support from reaction lows at 1.9595 and 1.9613. The low today (1.9599) could be the end of a 4th wave. In summary, we remain bullish as long as the decline from 1.9736 does not trace out 5 waves.
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STRATEGY: Bullish, against 1.9548, target above 1.9957
A triangle is the pattern that we have suspected may be unfolding in the USDCHF. In this case, “expect price to work lower in a choppy manner towards the mid 1.08s over the next few weeks.” The drop from 1.1105 is in 5 waves, therefore a rally to at least former resistance at 1.0986 is expected. The alternate count (in red) suggests that a significant low may be in place. The best way to play this would be with a breakout strategy through 1.1105.
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The decline from 1.0378 is clearly a 5 wave decline and an a-b-c corrective rally could be done at 1.0128 -- very near the former 4th wave and 50% of 1.0378-.9872. If a larger upward correction is underway, then a test of the 61.8% at 1.0184 is possible. However, our stance is that the larger decline has resumed and that price is headed below .9755 is coming weeks. Near term, a spike through 1.0142 may be required before the bear leg accelerates.
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STRATEGY: Bearish, against 1.0128, target below .9755
As long as the AUDUSD rallies in 5 waves and declines in 3 waves, there is no reason to adopt a bearish outlook. The rally from .8512 is expected to exceed .9400 in the coming weeks. Objectives are near 1.00.
We were concerned yesterday because the decline from .9084 to .8923 appears to be in 5 waves, which would be bearish. This is no longer of concern to us as bulls since .9084 has been exceeded. At this point, risk can be moved to .9004. Remember, our objective is in the mid .90s.
STRATEGY: Bullish, against .9004, target TBD
NZDUSD continues to range and may be forming a triangle. Since triangles are continuation patterns, then we would expect the break to occur to the upside. However, it is unclear where a triangle would fit in the larger pattern. Also, the decline from .7966 to .7781 is in 5 waves and the rally from .7781 was an a-b-c rally with wave b as a triangle. The decline from .7956-.7814 is best counted as in 5 waves; and not having established a new low suggests that price will come under .7814 and then .7781 in coming days.
STRATEGY: Bearish, against .7917, target below .7781
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