Dollar Bear Back in Full Force

ELLIOTT WAVE VIEW

Keep it simple -- the USDJPY has consolidated for in a tight range for nearly a month now and looks ready to break higher.  “After spending nearly a month in a tight range, the USDJPY is poised to break higher and test at least the mid 108s.  A 61.8% Fibonacci is at 108.50 and a former congestion area is at 108.30.  Although we remain long term bears 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.  Risk can be moved to 106.99.  Potential support is at 108.

Visit our recently updated Yen Currency Room for specific resources geared towards this currency.

STRATEGY: Bullish, against 106.99, target TBD

We wrote yesterday that “the advance from 1.9386 could be a series of 1st and 2nd waves, so an ‘explosion’ higher this week seems possible if not likely.  Cable’s ‘explosion’ appears to be underway.  Ideally, price remains above 1.9548 and the GBPUSD takes off in a 3rd wave.”  The count from 1.9386 is impulsive but far from complete.  The next level of potential resistance is at 1.9787.  Risk can be moved to 1.9548

Visit our recently updated British Pound Currency Room for specific resources geared towards this currency.

STRATEGY: Bullish, against 1.9548, target above 1.9957

A triangle is probably unfolding right now in the USDCHF.  The decline from the 1/22 high at 1.1122 is in 3 waves (A-B-C zigzag) and the rally from the 2/1 low at 1.0728 is also in 3 waves (complex W-X-Y advance).  Expect price to work lower in a choppy manner towards the mid 1.08s over the next few weeks.

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.

Visit our recently updated Canadian Dollar Currency Room for specific resources geared towards this currency.

STRATEGY: Bearish, against 1.0128, target below .9755

We wrote yesterday that “this count implies that wave 3 up is underway now and that the rally should accelerate.  The rally has yet to do that, which calls into question our count.  Still, as long as price is above .8817, we remain bulls.  This setback in the AUDUSD presents a great bullish opportunity against .8874.”  The AUDUSD has rallied nicely this morning but the decline from .9084 to .8923 appears to be in 5 waves, which would be bearish.  As long as our bullish levels remain intact, there is no reason to change our outlook.  At this point, risk can be moved to .8923 (from .8874). 

STRATEGY: Bullish (now is a good time to initiate or add to this position), against .8923, target TBD

Another reason to be wary of the AUDUSD rally is that the NZDUSD structure looks bearish.  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.