Euro Bullish Opportunity Against 1.5611

The expected drop below 1.5783 has occurred and we expect the EURUSD to form a low before 1.5611 and head higher, possibly to all-time highs.

EUR/USD

We wrote yesterday that "we are longer term bullish against 1.5611 but expect a drop below 1.5783 in order to complete a 2nd wave correction from 1.6039." The EURUSD has come under 1.5783 and is nearing measured support from the 78.6% of 1.5611-1.6039 at 1.5703 and where wave W = wave Y at 1.5689 (reinforced by the 7/10 low at the same level).

STRATEGY: Bullish, against 1.5611, targets 1.6325 and above

USD/JPY

We've indicated our lack of confidence in the bearish USDJPY position in recent days and today price action proved us wrong. The decline from 108.57 is in 3 waves (clearly) and the advance from 103.76-107.08 is an impulse. As such, the USDJPY could be setting up for a bullish break (above 108.57). Another possibility is that a triangle is unfolding in the X wave position from 108.57 (this means that the rally from 95.72-108.57 is wave W). Things need to clear up although aggressive traders may look to range trade the triangle.

GBP/USD

We wrote yesterday to "keep risk at 1.9810 and look for support near 1.9875". The GBPUSD bottomed at 1.9897 and has surged higher. Move risk to 1.9897 and watch for support near the short term that is drawn off of the 6/13, 7/7, and 7/8 lows. There is potential for a push through 2.04 in wave C of a flat in the coming week(s).

STRATEGY: Bullish, against 1.9897, target TBD

USD/CHF

Since the beginning of May, the USDCHF has traded in a choppy manner with a downside bias. The only thing that is clear about any recent price action is that the rally from .9647 is in 3 waves (separated by a triangle). This structure favors bears but the decline from 1.0624 is not an impulse. Stand aside until things clear up.

USD/CAD

Wave E may be complete. E waves (as we've written here often) are usually sharp and the decline has accelerated. The USDCAD has formed a base from the 7/15 low and a bullish bias is warranted against .9818. This is to prepare for the breakout above 1.0378 that is expected in the coming weeks.

STRATEGY: Bullish, against .9818, target above 1.0378

AUD/USD

The drop below .9677 may be a C wave of an A-B-C decline from .9849. If so, then the AUDUSD is near a low and .9849 will be exceeded. The only way we would turn bearish here is if the drop from .9849 turns into 5 waves; then we would get bearish on the retrace.

NZD/USD

The NZDUSD continues to fall and is likely in a 3rd wave down. A break of .7445 would confirm that speculation. The alternate treats the rally from .7445 as a W wave in a complex correction with wave X coming down to current levels. If this correct, then wave Y would begin soon and end above .7761.

DailyFX

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