The USDJPY is testing 108 this morning. Currency pairs tend to turn at these round 'psychological' figures. As such, this pair bears watching.
There is no change to the count since the EURUSD has yet to fall below 1.5364 (if that does happen, then we’ll publish a new count tomorrow). The decline from 1.5834 could be an a-b-c decline as long as 1.5364 holds.
Visit our recently updated Euro Currency Room for specific resources geared towards this currency.
STRATEGY: Bullish, against 1.5364, target above 1.5834
We are reiterating what we wrote yesterday when we presented the new count. “The USDJPY rally has gone through 107.20 so we need to look at other counts. One decline treats the drop from 124.13-95.72 as a W-X-Y decline (7 waves, which is corrective). However, it is not clear where this fits in the larger pattern (take a look at the monthly, and it is quite clear that the USDJPY has broken from a 4th wave bearish triangle). The other count is that the decline from 124.13 is a leading diagonal. In Elliott Wave Principle, it is stated that second waves following a leading diagonal often retrace 78.6% of the diagonal. Therefore, both counts suggest strength until 113/118 (roughly the 61.8% to 78.6%). The next short term move could be down in a b wave though (assuming that the advance from 95.72 is wave a). This sets up a near term bearish stance, then probably a flip to bullish in a few months for wave c.” Short term, the pair should encounter resistance from the 2/14 high at 108.59. A short trade will probably be triggered in the next few days.
Visit our recently updated Yen Currency Room for specific resources geared towards this currency.
1.9461 was taken out this morning on the retail-sales spike so we are flat for now. However, we still maintain that either a flat or triangle is unfolding. “Since 1.9337 (the 1/22 low), the GBPUSD is tracing out either a flat or a triangle as large wave B within an A-B-C correction from 2.1160.” In the case of a flat, Cable could drop below 1.9337 before rallying in wave C. If a triangle is unfolding, then 1.9364 will hold. Keep these levels in mind if you are trading the GBPUSD.
Visit our recently updated British Pound Currency Room for specific resources geared towards this currency.
“There is little doubt that the advance from .9647 is corrective because a triangle separates the two legs. The only question is whether or not the rally from .9647 is a complete 3 wave rally or just the first wave of a larger more complex correction. Regardless, a bearish bias is warranted against 1.0527.”
STRATEGY: Bearish, against 1.0527, target below .9647
The minimum objective that we have cited for some time is above 1.0324. However, the alternate (in red) commands a good deal of respect in this case given the USD bearish bias in the other pairs (alternate here is a triangle). This is why we mentioned the last few days to “think about taking some longs off of the table near 1.02.” There is no change to this strategy. In the case of the triangle, the rally from .9818 would be wave D of the triangle to be followed by wave E lower that ends near .98/99 and then a bullish breakout.
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STRATEGY: Bullish, against .9967, target above 1.0324 (but lighten up on longs ahead of 1.0324 resistance)
This is the long term count that we have been following (short term is not clear). The implications are that the NZDUSD has just entered a large C wave decline that will eventually come under .5927. The problem is that the decline since .8215 does not look impulsive. 1st waves often are tricky to count so it is possible. We’ll look for opportunities to sell below .7921 in the weeks ahead.
Tell us what you think about this report: contact the strategist about the article at jsaettele@dailyfx.com
