As long as the EURUSD and GBPUSD are above 1.3877 and 1.7445, there is potential for a dollar reversal (to the downside). Coming under the mentioned levels would eliminate the bullish counts.
The lower the EURUSD goes, the more I am inclined to label the drop from 1.4871 wave X in a larger correction (or wave B of a flat or triangle). The drop counts better as a 7 wave drop than an impulse (7 waves is corrective….a double zigzag). Also, the two zigzags are nearly equal at this point. Only a drop below 1.3877 eliminates bullish potential.
The USDJPY is still in a range. I favor the downside as long as price is below the trendline from the 110.71 top. However, failure to continue lower through 103.50 does not instill confidence in the bearish bias.
The GBPUSD drop from 1.8675 counts well as a double zigzag (similar to the EURUSD). The two zigzags would be equal near the 1.7443 low. A triangle and or flat counts is still very much valid from the 1.7443.
Divergence with RSI on the hourly warns of a top. Additional risk to bulls is the possibility that a larger correction is underway from 1.1422 and that the advance from near 1.07 is an X wave.
This is a possible count. Waves 4 and 5 are small relative to waves 1 through 3, but this is the best count I see right now. If the decline from 1.0827 is an impulse, then the USDCAD should roll over from near current price (61.8% to 78.6% Fibonacci levels).
The advance from .6435 is in 3 waves so a the long term decline may be back underway. It is also possible that a larger correction is underway that will end closer to .72. Action over the next several days should help to clear things up.
Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published at 6 pm EST), Daily Technicals every weekday morning (9 am EST), COT analysis (published Monday mornings), and analysis of currency crosses throughout the week. He is also the author of Sentiment in the Forex Market.
Contact at jsaettele@dailyfx.com
