A significant USD top is in place. The EURUSD is expected to exceed 1.5817 in the next few weeks and the GBPUSD is expected to exceed 1.9850 and probably test 2.02 by mid-July. Regarding the USDJPY (which we have admittedly been wrong on for some time now), we are just as frustrated as many of you probably are…on the bright side, this is often the individual psychology that attends significant turns.
The EURUSD has finally turned as we had been expecting for the last week. 1.5364 is viewed as a significant bottom and price is expected to exceed 1.5817 in the next few weeks. Regarding the bigger picture, it is possible that a push through 1.5817 will complete the second leg of a flat or the third leg of a triangle within a larger correction from 1.6018. The other possibility is that the EURUSD goes on to new highs before forming a significant multi year top. Either way, we are bullish against 1.5364.
Visit our recently updated Euro Currency Room for specific resources geared towards this currency.
STRATEGY: Bullish, against 1.5364, target above 1.5817
There is no change to the USDJPY analysis (which we have admittedly been wrong on for some time now). We have tried catching this turn 3 times and each time the market has told us that we are wrong. Potential resistance extends to the 2/28 high; at 106.63. This is also a major congestion area. Ideally, a top forms before 107.20 (failure to do so would require us to reassess the longer term pattern).
Note: we are just as frustrated as many of you probably are…on the bright side, this is often the individual psychology that attends significant turns
Visit our recently updated Yen Currency Room for specific resources geared towards this currency.
The GBPUSD story is the same as the EURUSD story. After breaking to multi-day lows, the larger bullish trend has resumed as expected. As long as 1.9461 is intact, the GBPUSD is expected to exceed 1.9850 and reach resistance from daily highs just shy of 2.0250. Risk on longs can be moved to 1.9461
Visit our recently updated British Pound Currency Room for specific resources geared towards this currency.
STRATEGY: Bullish, against 1.9461, target above 1.9850
Same story with the USDCHF as well (but as the inverse of the EURUSD and GBPUSD). “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.”
Note: the CHF may be the outperformer (along with the Yen) as risk aversion is expected to return (as suggested by stock market wave structure)
STRATEGY: Bearish, against 1.0527, target TBD
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 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)
The AUDUSD continues to respect the supporting trendline and as a result, we remain bullish. The advance from .8952 is likely the final leg of a diagonal that will lead to the major top mentioned in the longer term chart. “The rally from .8952 is wave C of a large 5th wave diagonal that could extend to a measured objective just below 1.00 in coming weeks (.9936).” A bullish bias is warranted against .9290 although price ideally remains above .9486.
STRATEGY: Bullish, against .9486, target .9936
From a price structure point of view, the decline since the March top at .8215 has been choppy and corrective. The drop counts well as a double flat (this is a complex correction). Moreover, the legs of the decline are roughly equal (a common characteristic among corrections). The leg up from .7536 is the closest thing to an impulse that the NZDUSD has shown since the March top. As such, a bullish bias is warranted against .7536 and the target is above .8215. Yesterday’s plummet may be wave C within the A-B-C decline from .7921.
STRATEGY: Bullish, against .7536, target above .8215
Tell us what you think about this report: contact the strategist about the article at jsaettele@dailyfx.com