- EURUSD at risk of corrective advance...resistance at 1.33
- USDJPY supported near term
- USDCAD; preparing for a breakout
The bottom line is that a corrective advance is due soon. Whether or not 1.27 is broken before the advance begins is another question. Dropping below 1.27 would complete a small 5th wave in a terminal thrust from a triangle. Bigger picture, the next leg of the multi year bear is underway from 1.47. A countertrend rally is expected and initial resistance is at 1.33.
As suggested recently, it is likely that either a triangle or a flat 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. Near term structure is bullish as long as price is above 89.68, which keeps the series of higher lows intact.
The rally from 1.35 is in just 3 waves (with the 2 up legs roughly equal…a common trait among corrections) and 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.
The drop from 1.2303 is an impulse (5 waves), but the drop may be the end of a decline rather than the beginning (a C wave). The decline would have completed an expanded flat at 1.0367. This level serves as the secondary low in a longer term bull cycle from .9634. Still, weakness is expected near term to at least 1.1312. The 200 day SMA is just above 1.10.
On Friday I wrote that “recent price action suggests that the triangle may be complete at 1.2020. Staying above 1.2123 keeps the triangle bullish breakout scenario intact. Short term support is in the 1.2380-1.2280 zone. A rally above 1.2552 warrants a bullish bias against 1.2123 in preparation for the breakout.” Fibonacci support held at 1.2285, which is a good sign for bulls
Staying above .6245 keeps the short term bull count on track in which the AUDUSD is working higher in order to complete a triangle or flat above .7275. If this outlook is correct, then the AUDUSD should form a low near current price (61.8% of rally from .6245). The objective is above .6857 at minimum (in case of a larger triangle) and possibly .7275 (in case of a larger flat).
The NZDUSD drop from .5454 is viewed as wave b in an a-b-c corrective advance from .4958. A c wave is expected to exceed .5454 and challenge resistance neat the .56 area over the next several weeks. The short term trend is bullish as long as price is above .4958.
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