* euro / dollar shows signs of short term low
* GBPUSD forming right shoulder of incerse head and shoulders?
* USDCAD triangle underway
* AUDUSD due for a bounce; resistance at .6784


The decline from above 1.47 is wave (b) in what is either a triangle or flat that began at 1.2327. In either case, additional downside is expected but probably not before a test of resistance near 1.3450. We should have the opportunity to buy below 1.30 late this week.


To review, the USDJPY rally failed just short of 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. The rally from 87.09 is in 3 waves, which is corrective. As such, a drop below 87.09 is expected. Near term, the decline from 94.67 appears impulsive and a small second wave corrective advance may be complete at 91.69. Staying below there keeps the bear count on track. A move above 91.69 would bring to the forefront the possibility that the corrective advance from 87.09 is not complete and that a complex correction (w-x-y) is underway that will end above 95.21.


The GBPUSD has plunged to test 1.4550 this morning. 1.4347 is viewed as the end of a 3rd wave that began at 2.0162 and a retracement of this decline is underway now. If this count is correct, then the GBPUSD should find a bottom soon (before 1.4347). An inverse head and shoulders pattern may be unfolding now as well.


The sharp drop from 1.23 is in 5 waves and probably wave A within an A-B-C correction that will end below 1.0367. The rally from 1.0367 is the B wave of that sequence and likely tests resistance from Fibonacci 1.15, eventually. Since the advance from 1.0861 is an impulse (5 waves), wave b is considered complete at 1.0861. Near term, it is unclear whether or not a small second wave is complete.


Recent strength in the USDCAD suggests that a triangle is unfolding as wave 4. Triangles unfold in 5 waves (a-b-c-d-e) and wave d is underway now. There is potential resistance at 1.2520 and 1.2750 going forward. The best strategy is to wait for wave e to end before attempting a long position (may be at least a week).


I wrote yesterday that weakness likely extends to .6750. The AUDUSD has dropped below .67 and at least a corrective advance is due in what could be a small 4th wave. Initial resistance is at .6784.


The advance from .5186 failed to retrace even 38.2% of the drop from .8219. As such, it seems unlikely that the rally from .5186 is complete. There is potential support in the .5346-.5415 zone. Additionally, an inverse head and shoulders may be underway from the October 2008 low.