-Exit AUDUSD long from 3/13 at profit
-Exit AUDNZD short from 3/6 at profit
-Trailing stop on EURUSD long from 3/6 hit at 1.34
-USDJPY stop at 99 survives...to this point
-Stops trailed on EURGBP and EURCAD longs (both from 3/6)
-New trades - playing USD strength through EURUSD, NZDUSD, and USDCHF
EURO / US DOLLAR
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| Classical Outlook: The latest topside failure by 1.3740 has opened the door for a potential resumption of the broader downtrend with the market now looking to trade back down towards initial support by the 100-Day SMA at 1.3115. We expect this level to be tested into Monday/Tuesday as the market fills the gap from the parabolic move in the previous week. However, there are no compelling trade opportunities at current levels and we prefer to take to the sidelines for the time being. |
| Elliott Wave Outlook: I wrote last week that “the sharp rally is most likely a second wave a 5 wave decline from 1.4723. Expectations over the next several weeks are for a top to form in the 1.38-1.40 zone.” The EURUSD never made it to the zone but recent weakness suggests that a top could be in place. |
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BRITISH POUND / US DOLLAR
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| Classical Outlook: Remains confined to a very prominent bear channel with the latest corrective rally stalling out by the 100-Day SMA to potentially set up the next medium-term lower top at 1.4780 (24Mar high). Look for additional weakness over the coming weeks with an eventual retest and break of the key trend lows at 1.3500 (23Jan low) favored. Only back above 1.4780 negates. |
| Elliott Wave Outlook: A triangle is most likely underway from 1.3500. At this point, 3 waves (a-b-c) of the triangle are complete. Weakness in wave d could test 1.40 next week. It is best to wait for the triangle to complete, which could take a few weeks before going short. |
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AUSTRALIAN DOLLAR / US DOLLAR
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| Classical Outlook: The market has stalled out by the 78.6% retrace (0.7050) off of the 2009 high-lows looks to be in the process of rolling back over for a resumption of the broader downtrend. Friday’s bearish price action and break below 0.6905 should accelerate declines back towards the 20/100-Day SMAs in the mid-0.6600’s. Only back above 0.7095 negates and exposes retest of the 0.7270, 2009 highs. We will look for opportunities to sell into rallies. |
| Elliott Wave Outlook: The AUDUSD may continue to strengthen in what is wave Y of a complex correction from .6005 that will end above .7272. However, price action since October has carved out a potential head and shoulders continuation pattern (bearish). A top may be in place. Exit existing long positions. |
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NEW ZEALAND DOLLAR / US DOLLAR
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| Classical Outlook: The break to fresh multi-year highs on Thursday appears to have been a false break, with the market reversing course on Friday after failing by the 78.6% fib retrace off of the yearly high-lows. There is now the potential for the formation of an inter-day double top, which if broken by the neckline at 0.5550, would project deeper setbacks to 0.5300 by the 20-Day SMA. The daily RSI has only just now broken back under 70 and there is plenty of room for additional pullbacks in the days ahead. |
| Elliott Wave Outlook: A wave 2 high may be in p lace at .5809. The second wave would be in the form of a flat from the 2/2 low at .4958. There is more confidence in the NZDUSD count than the AUDUSD because Kiwi appears to have completed 5 waves up (as wave c of 2) from .4890. |
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US DOLLAR / JAPANESE YEN
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| Classical Outlook: Although price action this week has been confined to the previous weekly range, we continue to hold a bullish bias and look for a direct retest of the 99.70 yearly highs over the coming week. A break above 99.70 should then trigger a fresh wave of buying above critical psychological barriers at 100.00 and towards the major double bottom (triggered on the break of 94.60 on 23Feb) measured move objective at 104.00. Dips should be well supported ahead of 95.45. |
| Elliott Wave Outlook: The rally from 87.09 is in 3 waves (corrective), so it is possible that the long term decline has resumed. Staying below 99 keeps the bearish bias intact. Price is expected to eventually drop to a new low (below 87). |
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US DOLLAR / CANADIAN DOLLAR
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| Classical Outlook: Despite the recent decline, the overall structure remains quite constructive with the current pullback classed as corrective. Setbacks had broken down through the 61.8% fib retrace off of the 2009 low-highs were unable to establish below, resulting in Friday’s push back above the 1.2365 short-term consolidation highs. We are now looking for a medium-term higher low by 1.2190, ahead of the next upside extension beyond 1.3065. |
| Elliott Wave Outlook: Since the USDCAD did exceed its wave 3 terminus on March 9, it is possible that wave 5 within a 5 wave advance from the 2007 low is complete. Near term structure is not especially clear but price above 1.2239 keeps the short term trend pointed up. |
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US DOLLAR / SWISS FRANC
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| Classical Outlook: The pair was very well supported on the recent dip to 1.1165 (3Mar low) with the 50% fib retrace off of the 1.0370-1.1970 move (1.1170) and the 200-Day SMA (1.1200) propping. The risk from here is for a fresh upside extension back towards the range highs by 1.1970 over the coming weeks. Friday’s break above 1.1345 confirms bullish bias. However, we would expect to see some initial resistance in the 1.1500’s with the 20/50/100-Day SMAs all converging above the figure. |
| Elliott Wave Outlook: Like the EURUSD, the USDCHF may have resumed it’s longer term trend towards USD strength. Near term, bulls are in control as long as price is above 1.2222. Look to buy a dip near 1.1350. |
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EURO / JAPANESE YEN
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| Classical Outlook: After easily taking out the previous 2009 highs at 126.10, the market has rallied intensely to 134.55 on Tuesday ahead of the latest pullbacks. With inter-day studies now looking stretched and a bearish weekly gravestone doji taking form, the risks from here are for additional setbacks, potentially back towards the previous 2009 highs at 126.10. Only back above 134.55 negates. |
| Elliott Wave Outlook: I mentioned the possibility last week that “wave C of a flat could be working higher to end above 131.” The EURJPY shot through 131 but erased all of its gains today. I do expect a top to form as either wave 2 or B in the bear cycle from 160 but there is not enough evidence to suggest that 134.64 is that top. |
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EURO / BRITISH POUND
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| Classical Outlook: A 3-week rally has finally stalled out with the cross putting in a bearish inside week. A medium-term lower top now is now sought out below 0.9520 at 0.9495, ahead of the next downside extension below 0.8635. Look for a break below 0.9145 to confirm bearish outlook and accelerate declines. Ultimately, only back above 0.9520 negates and exposes a 0.9805 retest. |
Elliott Wave Outlook: There is no change to the long held outlook that the EURGBP will eventually exceed .98 and reach parity. The initial target has been reached and the stop has been trailed to .9140. A drop below there would not alter the longer term bullish outlook but would expose the 3/2 high at .9016.
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EURO / CANADIAN DOLLAR
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| Classical Outlook: While the overall structure remains grossly bullish, an extremely bearish inside week delays additional recovery prospects for now. Our bias is neutral and we would recommend looking for a break above 1.6975 or back below 1.6380 over the coming days for clearer directional bias. |
| Elliott Wave Outlook: From last week: “Decline from 1.7522 is in 3 waves and that high should be exceeded.” There is no change to the outlook. Staying above 1.6320 keeps the bull strong. |
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TRADE LIST
*Entry prices for trades that are recommended ‘at market’ are listed as the close price on the date published.
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