British Pound Attempting to Hold Major Support

The USDJPY remains stuck at the top of its recent range and we have present an alternate count today (although that is still short term bearish). Meanwhile, the GBPUSD has been testing (and so far holding) major support.

EUR/USD

There is no change to our commentary as the market has traded sideways. "The decline from 1.6018 began as an impulse but has failed to continue as one. This does not necessarily mean that the EURUSD uptrend will resume (although it could) but it does mean that at least a sizeable bounce is due. The rally from 1.5283 could be a series of 1st and 2nd waves or wave i of a diagonal. Either way, look higher near term. Ideally, 1.5364 remains intact but coming under 1.5283 would warrant a bearish break strategy. To the classical chartist, price is forming a clear inverse head and shoulders pattern which would be confirmed on a break through 1.5570."

STRATEGY: Bullish, against 1.5364, target TBD

USD/JPY

We are proposing an alternate but first let's review what we have been favoring. "We remain bearish as long as the USDJPY is below 105.70 (which has come close to being breached seemingly this entire week). The potential for a sizeable decline in a 3rd of a 3rd wave within the bear cycle from 105.70 does exist." The count described remains favored but the alternate treats the consolidation since 105.70 as an X wave (probably will form into a triangle), which will lead to a new high in wave Z before the larger decline resumes.

STRATEGY: Bearish, against 105.70, target TBD

GBP/USD

In Elliott, there is something to be said for the 'right look'. Does the circled area look like a C (or 3rd) wave decline? We don't think so either. It seems more likely then that a complex correction (W-X-Y) is unfolding since the 1/22 low at 1.9337. Within wave X, the two legs of the decline would be equal at 1.9228. This does not mean that Cable will reach that level but it is an area to expect support. In summary, we expect a larger rally to begin in the next few days (there is the possibility that a low is in place at 1.9364).

USD/CHF

We view the rally from .9674 as an A-B-C advance (corrective) but this does not mean that the larger downtrend is back underway (similar to the EURUSD). The advance may well be the first leg in a larger, more complex upward correction but a sizeable decline is expected regardless (probably into parity).

STRATEGY: Bearish, against 1.0624, target below 1.0389

USD/CAD

The USDCAD count is tracking well. We had mentioned in recent days that "the decline is expected then to continue until measured support, which begins at .9945 and extends until .9841. The larger bullish bias is valid against .9710." The pair is nearing support from the 61.8% of .9710-1.0324 at .9945. The next level of potential support is just below there at .9903 (100% extension of 1.0324-.9987/1.0241).

AUD/USD

We moved risk to a very tight level yesterday mentioning that "we have moved risk to such a tight level because very short term, the advance from .9290 is impulsive, suggesting that a bottom is in place." The AUDUSD has soared today and is half a penny within an all-time high. A break to the upside could lead to a test of a target near 1 (.9936). Near term support is at .9440.

NZD/USD

Kiwi has reversed in impressive fashion. We have been bearish against .7727, expecting a much larger decline in the coming months. The spike this morning has yet to exceed our bearish line in the sand so we are staying with the count above until proven wrong.

STRATEGY: Bearish, against .7727, target TBD

DailyFX

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