A drop below 1.9941 would suggest that the GBPUSD has entered into a 3rd wave down. The short term objective would not be until 1.9535. Bigger picture, the pair may be in the early stages of the move to 1.85.
The EURUSD has extended higher and is closing in on 1.60. A push through 1.5904 would make the rally from 1.5146 5 waves and possibly complete the entire rally from 1.4438. We say this because the rally from 1.4438 can be divided into 5 waves itself as shown on the chart above. 1.5914 (just above the Monday high at 1.5904) is where wave 5 (from 1.5282) would equal 61.8% of waves 1 through 3. In summary, it appears that the EURUSD is headed to a new high. Coming under 1.5612 would suggest that a top is in place.
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The decline from 108.35 is wave iii of 3 of larger III from 124.13. It is possible that there are 5 waves complete at 95.72. The up, down sequence from 95.72 is counted as waves A and B from 95.72. Expectations are for wave C to exceed 100.44 and test the area of the former 4th wave in the 101.40-103.60 zone.
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STRATEGY: Bullish against 95.72, target TBD
We have concentrated closely on the GBPUSD recently because we are expecting a fast decline to 1.8500 over the next few months. “The rally from 1.9361 is wave C within the A-B-C advance from 1.9337. Wave C should divide into 5 waves and 5 waves can be counted from 1.9361. As such, a major top may be in place at 2.0396.” The rally to 2.0271 may be wave ii within the 5 wave decline that began at 2.0396. Risk can be moved to 2.0271.
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STRATEGY: Bearish, against 2.0271, target TBD
It looks as though the USDCHF will continue lower. We do contend that the drop from 1.0352 is wave 5 within the 5 wave drop from 1.1105. It still appears that one more low is required (below .9647) before a sizeable rally develops. A rally through 1.0051 strongly indicates that a low is in place at .9647.
As long as the declines are in 5 waves and the advances are in 3 waves, there is no reason to fade the downtrend. Price should come under .9710 soon. The bearish line in the sand is 1.0197. The rally from .9710 is probably a combination complex correction (W-X-Y). Wave Y would equal wave W at 1.0068, near the 78.6% of 1.0197-.9710 at 1.0093.
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STRATEGY: Bearish, against 1.0197, target TBD
The 60 minute chart zooms in on the rally from .8512 (January low). The rally from .8512 is viewed as wave 5 of large C. So far, there are only 3 waves complete to .9496. The drop yesterday to .9127 probably completes wave 4 within the 5 wave advance from .8512.
STRATEGY: Bullish, against .9127, target TBD
An ending diagonal is underway from the 1/22 low at .7494. Exceeding the wave 3 high of diagonal at .8214 would satisfy minimum expectations for wave 5. Today’s high is right at the wave 3 high of .8214. It is possible that this is the top of wave 5 and the entire rally from .6639. Under this scenario, larger wave C would begin now and eventually come under .6639.
STRATEGY: Short, against .8215, target TBD
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[1] STRATEGY is a quick summary of our best technical ideas. The ideas are subjective and are subject to change everyday although trades are typically held for at least a few days and sometimes a few weeks or more. Ideas are also included for crosses throughout the week; these are published at separate articles at DailyFX.