The USDJPY traded below 100 for the first time since October 1995. The short term pattern suggests that a rally to at least the 102.50 area is probable near term. The EURUSD pattern suggests that price is very close to a major top.
All of the objectives that we have mentioned recently have been exceeded, including where wave 5 would equal wave 1 within the 5 wave advance from 1.4438. We are concentrating on the rally from 1.5282 today; which we are treating as wave 5 of 5. The rally looks very close to complete. In fact, a push through 1.5625 would possibly complete an ending diagonal from 1.5521. Coming under 1.5535 suggests that a top is in place.
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The USDJPY broke traded below 100 today for the first time since October 1995. More importantly, the pair broke below waves b and d of the long term triangle. This supports our long term call for price to drop below the 1995 low of 81.12. However, we do expect a rally near term. There are 9 waves down from 103.58 (which we are treating as the end of wave 4 on the chart above). Therefore, expect a rally to at least 101.69 and possible higher near term.
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We have concentrated recently on the fact that “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 so far there are only 3 waves up. As such, we expect additional gains. The next likely resistance point is the 61.8% at 2.0463.” If the count above is correct, then wave 1 of C is 585 pips (truncated), and wave 3 is 501 pips. Wave 3 can not be the shortest wave, therefore wave 5 must be no longer than 501 pips. A 500 pip rally from the wave 4 low (1.9995) places the end of wave 5 at 2.0495; very close to the 61.8% of 2.1160-1.9337 at 2.0463. Today’s high is at 2.0389. We are on the lookout for a short opportunity. Be sure to check FXCMTR for ideas.
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We wrote yesterday that “price would come under 1.0134 in a 5th wave to complete the decline from 1.1105. A larger upward correction would then take place.” The drop today to 1.0046 satisfies minimum expectations for wave 5. Very short term (5 min chart), 5 wave up from 1.0046 are visible. Look for long opportunities against 1.0046
STRATEGY: Bullish, against 1.0046, target TBD
The USDCAD has hardly budged. If a 3rd of a 3rd wave was underway from .9981, then the USDCAD should have accelerated lower by now. Since it has not, we expect .9981 to be exceeded and for larger wave 2 not to end until the 61.8% at 1.0011 or the 78.6% at 1.0093. Still, a longer term bearish bias is warranted against 1.0197.
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STRATEGY: Bearish, against 1.0197, target TBD
STRATEGY: Bullish, against .9147, target .9800
Since the top in July at .8108, we contend that the NZDUSD is tracing out a large expanded flat. Wave B of the flat could test .8504 (127% of A) or .7634/69 (100% extension of a within B and 138.2% of A). The rally from .7874 is an impulse, which warrants a bullish bias. Near term, the entire rally from .7383 may be taking the form of an ending diagonal (overlapping and each leg consisting of 3 legs).
STRATEGY: Bullish, against .7874, target .8480
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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.