- EURUSD to press 1.25 again
- USDJPY Fibonacci resistance above January high
- GBPUSD break below 1.4150 expected
- USDCHF ending diagonal nears completion
- USDCAD...staying long for the break
The EURUSD is searching for a multi-week bottom. It is possible that the low is in place at 1.2510 if the triangle ended at 1.2947. The advance from 1.2510 is sharp and indicative of an impulse. However, I favor the count that treats the end of the triangle at 1.3077; which means that it is probable that an ending diagonal is underway. To complete the diagonal, price needs to drop below 1.2510.
As suggested recently, it is likely that either a triangle or a flat (likely a flat at this point) is unfolding from the December low at 87.09. I say this because both the advance from 87.09 and decline from 94.67 are in 3 waves. The subwaves of triangles and flats are 3 wave affairs. A break above 94.67 exposes the 38.2% of 110.71-87.09 at 95.45.
The rally from 1.35 is in just 3 waves (with the 2 up legs roughly equal... a common trait among corrections) and the decline from 1.4990 may be the next down leg in the long term bear. There is the chance that 1.4609 is the top of either a b wave or small 2nd wave within a bear cycle from 1.4990. A head and shoulders top is now visible, which favors bears as long as price is below 1.4609. 1.3775 is potential support (100% extension of 1.4990-1.4134/1.4609). I wrote yesterday that “there is potential resistance at the current juncture from the 61.8% of the decline from 1.4609 (1.4431).” Price reversed and a break of the head and shoulders is favored.
The rally from 1.0367 is the beginning of the next long term bull leg. Near term, this advance is nearing completion in an ending diagonal from 1.1312. Watch the upper end of the diagonal line for resistance. The line crosses roughly 1.1920 today and increases about 20 pips per day.
As I've favored the last few weeks, the triangle that has been underway since October is probably complete at 1.2020. Price has rallied above the upper triangle line (although has pulled back today), which warns of a break above 1.2770 and then 1.3025. The breakout scenario is favored as long as price is above 1.2278.
I am zooming out to the daily in order to highlight the long term bearish implications from the 5 wave drop and subsequent 3 wave rally (since July 2008). The corrective rally from the October 2008 low ended right at the former 4th wave, which is typical of corrections. The pattern since the October low can also be categorized as a head and shoulders continuation. Coming under the February 2 low at .6245 would mark a break of the neckline and focus would then shift to the October low of .60. Staying below .6649 favors bears.
The NZDUSD has also declined impulsively (5 waves) since its 2008 high and that decline was followed by a 3 wave rally (from the November low). The drop from .6090 is viewed as beginning of the next bear leg. Staying below .5322 favors bears.
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