Jamie's Pick: 05/06/11
After trading sideways, the EURUSD spiked lower on this morning’s NFP. That low will probably hold as there are now 5 waves down from the top and those late to the USD party need to suffer some pain before the trend resumes. Expect a sharp wave 2 (or B) rally back towards 14700/55 (50%-61.8% retracement and former support). Expect a secondary top early next week. The next downside objective will probably be 14275.
After reaching support from former resistance at 10580, the AUDUSD has rallied violently and there may be a bit of upside left. 10830 is defined by the 100% extension of the rally from 10536 and the 61.8% retracement of the decline from the top. Watch short term channel resistance for a top as well. I expect a secondary top in this area and an eventual drop below 10536 – 10360 is an early guesstimate at an objective.
The NZDUSD top is in place as the decline from 8121 is in 5 waves. I wrote yesterday that “near term expectations are for some consolidation / corrective strength back towards 7950 before a much larger decline takes place.” The bulk of the advance is complete but given the expected strength in the EURUSD, GBPUSD, and AUDUSD it makes sense to expect a test of 8000 (61.8% retracement) before weakness resumes. Downside objective next week are 7690 and 7500.
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