Euro Triangle Still Possible: Short Term Bearish Implications

The larger trend remains bullish for the EURUSD but the triangle pattern that we have focused on recently is still very much in play. If a triangle is indeed unfolding, then the EURUSD would likely drop sharply into 1.5450 support before resuming the larger uptrend.

EUR/USD

The EURUSD is expected to exceed 1.6018 and continue on to all-time highs in the next few weeks BUT a triangle may be unfolding in which case the advance from 1.5303 would be wave D and wave E would be underway now. E waves of triangles are usually sharp and deep; so it is probable that the decline would continue until 1.53/1.54. Longer term traders should remain bullish against 1.5303 and look to add to long positions on the wave E drop. Short term traders should be bearish against 1.5837 and look to flip on the wave E drop.

STRATEGY: Bullish, against 1.5303 (short term traders should be bearish against 1.5837), target is above 1.6018

USD/JPY

The USDJPY decline from 108.57 could be the beginning of larger wave 3. However, it is not yet safe to enter from the short side. For timing purposes, we are focusing on the very short term pattern today. The rally from 104.99 is an impulse (5 waves) and the subsequent drop is a correction (zigzag). Price should then exceed 106.38 in the next day or so. We'll look for a top and reversal near 107.11 (6/17 top and 61.8% of 108.41-104.99).

GBP/USD

A C wave (of either a triangle or flat) is underway. If a triangle, wave C likely continues until 2.02 (March 27 top). If a flat, wave C will continue through 2.04. The pair has tested 2.00 today so expect a sizeable reaction (lower). 1.9800 should provide support.

STRATEGY: Bullish, against 1.9583, target 1 at 2.0175, target 2 TBD

USD/CHF

The USDCHF is probably on its way to a new low. The advance from .9647 is in 3 waves and therefore corrective. 3 wave movements are eventually completely retraced. A bearish bias is warranted against 1.0493. Near term, a push through 1.0227 is likely. Look for resistance near 1.0266.

USD/CAD

This is a close up view of wave E of the triangle (which is larger wave B within an A-B-C from .9055). With the advance from 1.0047 taking an impulsive look, probability is high that the wave E low is in place. Look for support near 1.0150.

STRATEGY: Bullish, against .1.0047, target above 1.0324

AUD/USD

We wrote yesterday that “the push through .9653 satisfies minimum expectations for the rally from .9327. Also, the advance is in 5 waves (with an ending diagonal) so a correction, probably back to former support near .95, is expected.” The AUDUSD has slipped, trading to .9511 today. We still expect price to test former support at .9492. The structure of the drop will alert us to the next probable move.

NZD/USD

Bigger picture, the NZDUSD is expected to advance to the 50% of .7921-.7445 at .7683 and perhaps even the 61.8%-78.6% at .7740-.7920. A rally to there would fill the 6/4 gap. The up-down sequence from .7445 is probably waves A and B. Wave C is considered underway as long as price is above .7530.

STRATEGY: Bullish, against .7530, target TBD

DailyFX

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