-euro bounce not yet convincing
-USDJPY rolls over at important resistance area
-British Pound takes 1.50; rally to extend
-AUDUSD at potentially strong resistance
I wrote yesterday that although the drop from 1.6040 can be counted as a 5, the count fits better as a 3 in my opinion. The sharp drop from 1.6040 needs time to be corrected, so a triangle or flat is probably underway from 1.2327. With this in mind, the next opportunity will come from the long side. There is potential support at 1.33 (former resistance) as well as 1.3085-1.3120 (also former resistance). 1.33 held up and the EURUSD has rallied nicely since then. Due to the fact that the pair remains close to the center of a large correction, I can not be confident that 1.3310 will hold. In fact, given that a triangle or flat is probably underway, I see it as unlikely that 1.3310 holds up.
Staying below 100.60 keeps the long term bear trend intact. USDJPY sellers came in just before the 61.8% of 1006.60-87.09 at 95.21. This is also the center of a former congestion zone (roughly 94-97) as well as the 100% extension of the rally from 87.09 to 91.31; at 94.08.
I wrote yesterday that divergence with RSI on the daily chart also warns of a pending rally. A significant congestion zone has formed, and a strong directional move is expected soon. The weight of evidence suggests that the move will be higher. The GBPUSD has gone through 1.50 after having tested 1.45 just yesterday. Additional upside is expected. The next resistance is former support at 1.5259. 1.5420 is calculated monthly pivot R1. Risk can be moved to 1.48.
To review the bigger picture…a 5 wave advance from .9634 is viewed as the first bull leg in a multi-year uptrend. The sharp drop from 1.23 is the bulk of the correction (wave A) in terms of price but not time. The rally from .9634 took 9 months and the corrective decline has entered the beginning of its 3rd month. The USDCHF may enter into a sloppy range in this B wave before testing potential resistance from Fibonacci near 1.13 and 1.15. Wave b is underway now and could reach 1.07 (61.8% of a). Over the next few days, the USDCHF may fall into a range (triangle).
We need to wait for the USDCAD to complete this 4th wave correction prior to taking a directional stand. A drop below 1.1459 would do the trick as that would most likely be the end to a flat. A triangle is also not out of the question, although in that case a tightening range would last at least a month or more.
The AUDUSD has reached initial resistance from the confluence of the October 14th high / 38.2% of .9856-.6005 at .7247/56. This is a good place to exit longs since it is also possible to count 5 waves up from .6072 and daily RSI is at 80.
Expectations are for a rally through .6090 while the NZDUSD remains above .5655. Fibonacci at .6183 combined with congestion in that area is likely resistance.