After months of nearly uninterrupted strength, the EURGBP is probably in the middle of a multi-month corrective pattern. One such pattern is a triangle (the lines are drawn on the chart). A new high is expected in a 5th wave (within the 5 wave advance from .6535), but not before the large wave 4 correction is complete. With the EURGBP likely stuck in a corrective pattern for the next few months, range trading is the way to go.
The drop from 1.6827 may be a series of 1st and 2nd waves or a completed A-B-C correction. In either case, the EURCHF will probably rally near term. If the drop is a series of 1st and 2nd waves, then price likely reverses near the 61.8% of 1.6727-1.5823 at 1.6382 (also former congestion).
The EURCAD looks nearly identical to the USDCAD. The rally from 1.3285 to 1.5198 could have completed a 3 wave advance (A-B-C in red). If this is the case, then the EURCAD will drop to a new low (below 1.3285). It is also possible that the rally from 1.3285 to 1.5029 is wave 1 or A in a larger rally and that an expanded flat is unfolding (lower case a-b-c in black). If this is the case, then the EURCAD will come under 1.4162 and possibly test the 61.8% of 1.3285-1.5029 at 1.3952 before the next bullish leg. Either way, price is expected to come under 1.3952.
The advance from 1.5491 to 1.7159 is a clear 5 wave advance. A 3 wave (A-B-C) corrective decline will likely resolve itself in the next few weeks. Wave iv of C could reach 1.6300/20 before wave v registers the C wave low, perhaps close to the 161.8% extension of A; at 1.5846. It is near this level that longs should be established, against 1.5491. The rally that ensues should exceed 1.7159 and may be the beginning of a much more significant multi-year rally.
Much like the EURAUD is forming a significant low, so too is the EURNZD. The 1.7029-2.0170 rally was an impulse that is either wave A or 1 in a bull cycle. Since then, a complex correction (W-X-Y) known as a triple three has formed. This corrective decline is nearing completion. Wave Y would equal wave W at 1.7907. Another possible terminus for the entire decline is at the 78.6% of 1.7029-2.0170 at 1.7698.
Tell us what you think about this report: contact the strategist about the article at jsaettele@dailyfx.com
TREND ANALYSIS is based on a rolling pivot model. LONG TERM TREND is determined by the last 3 months of price data (high, low, close). SHORT TERM TREND is determined by the last 4 weeks of price data (high, low, close). R3, R2, R1, PL, PH, S1, S2, and S3 are provided to aid in identifying entries and exits. These are objective measures and our subjective analysis (STRATEGY) may differ.
SCHEDULE
Monday: EURJPY, GBPJPY, CHFJPY, CADJPY, AUDJPY, NZDJPY
Tuesday: EURGBP, EURCHF, EURCAD, EURAUD, EURNZD
Wednesday: GBPCHF, GBPCAD, GBPAUD, GBPNZD
Thursday: AUDCHF, AUDCAD, AUDNZD
